Advance Fee Loans

5/13/2008

The BBB Serving NELA receives many calls from consumers and businesses every day with questions stemming from phone calls, e-mails, and mail. The BBB provides reliability reports on businesses and charities whether local or national.

Advance Fee Loans is a type of business we receive a lot of questions on. The story is so common to all of us: We see advertisements for pre-approved loans and credit card applications. The company tells us they can offer us a loan regardless of our credit history, if we pay up-front "insurance", "security", or "processing" fees. All too often those with bad credit – who can least, afford it end up losing their up-front fee and never hear from the company again.

According to the Telemarketing Sales Rule, if someone guarantees or suggest that there is a strong chance they will be able to get or arrange a loan or some other form of credit for us, it's against the law to ask us to pay or accept payment for their services until we get the loan or credit.

    The Better Business Bureau along with the Federal Trade Commission offers these points to keep in mind before responding to ads that promise easy credit, regardless of credit history:
  • Legitimate lenders never "guarantee" or say that a loan or credit card is likely BEFORE application, especially if bad credit, no credit, or bankruptcy is involved.
  • When applying for a real estate loan, it is common practice and accepted for lenders to request payment for a credit report or appraisal. However, legitimate lenders NEVER ask for a payment for processing an application.
  • Never give credit card numbers, bank account information, or Social Security numbers over the phone or Internet unless you are familiar with the company and know why the information is necessary.
  • If you don't have the offer in hand or confirmed in writing and you are asked to pay DON'T do it. Its fraud and against the law.