Consumer Affairs Programs and Services

Avoiding Credit Scams
Easy Credit Is Not Always Safe Credit

Although most lenders are owned and operated by legitimate professionals, there are fraudulent loan brokers and credit companies that misrepresent the availability of credit and credit terms in order to cheat individuals out of money.

Many fraudulent companies charge customers an advance fee in order to guarantee a loan or credit card. These fees can range from $100.00 to several hundred dollars. In these cases, the customer never receives the loan or credit and the con artist disappears with the money.

Often in scams, fraudulent lenders place advertisements in classified sections of local and national newspapers, the internet, radio and cable television, which make them look like they have credibility. However, advertising in recognized media sources does not guarantee a company’s legitimacy. The ads usually include loan or credit offers for advance fees and feature “900” numbers, which result in charges on your phone bill.

Below are some tips to protect yourself from credit scams:

Legitimate lenders never guarantee that you will receive a loan or credit card before you apply, especially if you have bad credit, no credit or are in bankruptcy. According to the Telemarketing Sales Rule, it is illegal for telemarketers to guarantee or suggest they can arrange a loan and ask you to pay money up front.

If you apply for a real estate loan, it is common practice for lenders to request payment for a credit report or appraisal. However, legitimate lenders never ask you to pay for processing your application.

Never give your credit card account number, bank account information or Social Security number over the telephone 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 and confirmed in writing, don’t do it. Also, any lender that requires you to pay an advance fee to guarantee you a loan or credit card is a scam.

If you think you are the target of loan or credit card fraud, contact the Federal Trade Commission (FTC) at 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft and other fraud related complaints into a secure online database called the Consumer Sentinel, which is available to hundreds of civil and criminal enforcement agencies in the U.S. and abroad.

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