Better Business Bureau Warns Consumers About Advance Fee Loan Scams - OppLoans

Better Business Bureau Warns Consumers About Advance Fee Loan Scams - OppLoans Better Business Bureau Warns Consumers About Advance Fee Loan Scams Better Business Bureau Warns Consumers About Advance Fee Loan ScamsInside Subprime: March 18, 2019By Lindsay FrankelThe Better Business Bureau’s 2018 Risk Report, released March 6, found that advance fee loan scams were again one of the top five riskiest scams this year with regards to their impact on consumers. The BBB measures the overall risk of various scams by using data to assess the frequency of scams (exposure), the percentage of consumers who fell for the scam (susceptibility), and the median monetary loss that occurred as a result of the scam.Consumers experienced greater exposure and susceptibility along with increased monetary loss associated with advance fee loan scams when compared to last year’s data. Those who fell for these scams in 2018 lost a median of $675.Advance fee loan scammers target people with bad credit. While some no credit check loans are legitimate, a lender will never “guarantee” that consumers will receive loans before reviewing their applicat ions. And, according to the Federal Trade Commission, “It is illegal for companies doing business by phone in the U.S. to promise you a loan or credit card and ask you to pay for it before they deliver.”Scam artists often promise low interest rates on these loans, something that wouldn’t be feasible for a legitimate lender. The average payday loan has an APR of almost 400 percent, according to the Consumer Financial Protection Bureau.Aside from the red flag of an advertised low interest rate, regardless of credit score, on a “guaranteed” loan, the BBB has some other tips for avoiding advance fee loan scams.Never pay upfront fees before receiving the loan. Legitimate lenders often charge application fees or credit reporting fees, but these fees will be clearly outlined and collected out of the money you receive from the loan. Advance fee loan scam artists, by contrast, will try to get you to pay an upfront fee before you receive any money. Often, these are called “process ing fees” or insurance and are said to lock in the interest rate or secure access to the loan. But after you submit the payment, the scammer disappears, never issuing a loan at all.Never wire money or submit payment to an individual. A legitimate business will never ask you to pay an upfront fee directly to an individual. A real lender will also never pressure you to submit a money order, use a wire transfer service, or pay the company with gift cards, and you’ll have little recourse if you pay a fee using these methods.Research the lender. Some scammers will pretend to be legitimate lenders or institutions. Others use copycat names that sound official. Scam artists will use professional-looking websites, produce forged paperwork, and use caller ID spoofing. To ensure you’re talking to a legitimate lender, hang up and contact the organization directly. You should also check to make sure that the lender is registered in your state by calling your state Attorney General’s Offi ce or contacting your state’s Department of Banking or Financial Regulation.To report an advance fee loan scam, access the BBB Scam Tracker.For more information on  payday loans, scams, and  cash advances  and  check out our  city and state financial guides  including California, Florida,  Illinois, Texas, and more.Visit  OppLoans  on  YouTube  |  Facebook  |  Twitter  |  LinkedIn