Magazine article USA TODAY

Beware Advance-Fee Loan "Sharks"

Magazine article USA TODAY

Beware Advance-Fee Loan "Sharks"

Article excerpt

A different breed of "loan shark" is preying on unwary consumers by taking their money for the promise of a loan, credit card, or other extension of credit, warns the Federal Trade Commission (FTC). Advertisements and promotions for advance-fee loans "guarantee" or suggest that there is a high likelihood of success that the loan will be awarded. regardless of the applicant's credit history. To take advantage of the offer, though, the consumer first has to pay a fee, and that is the catch. The consumer pays the fee; the scam artist takes off with the money; and the loan never materializes.

Legitimate guaranteed offers of credit do not require payments up front. Legitimate lenders may require consumers to pay application, appraisal, or credit report fees, but these seldom are required before the lender is identified and the application completed. In addition, the fees generally are paid to the lender, not the broker or arranger of the "guaranteed" loan. Legitimate lenders may guarantee firm offers of credit to credit-worthy consumers, but they rarely do this before evaluating a consumer's creditworthiness.

Advertisements for advance-fee loans generally appear in the classified section of daily and weekly newspapers and magazines. …

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