If you find yourself in need of money, you may turn to loans. Unfortunately, scammers are trying to steal money by convincing borrowers they need to pay up in advance to get cash. Better Business Bureau's Emily Valla explains.
This is called an 'Advanced Fee Loan' scam. In one common version, a supposed 'broker' promises a loan no matter how bad your credit history is. One victim reported their report to BBB’s Scam Tracker this month. He was told he was approved for a loan, but had to pay an insurance policy due to bad credit. The victim says he was told the fastest way to get the loan would be to purchase an Amazon gift card for $650. Once he did, the scammers came back for more, now saying he owed taxes," Valla said.
According to BBB, there are many versions of this con. Home mortgage refinancing, low-cost government loans, student loan consolidation, special grants, or just an emergency loan to pay the bills are all being targeted.
"The catch is some kind of fee upfront, such as a 'processing fee' or insurance to get the loan or to lock in the low interest rate. Once you hand over the payment, the 'lender' vanishes along with the money," Valla continued.
So how can you tell the difference between legitimate loan fees and bogus scams?
"Look for vague or unclear fees charged before you get the money. There are often fees charged for loans; application fees, appraisals, or credit report fees. A real lender will post those fees prominently and may collect them from the money they are lending you, but a scam lender may try to collect them as a condition for you getting money. Any upfront fee you need to pay before getting the loan is a cue to walk away," Valla said.
BBB recommends researching the lender or loan broker before you agree to anything. Check if they are properly registered with the Idaho Department of Finance.