WORD TO THE WISE: Companies that promise loans for fee can’t deliver

The BBB has witnessed a national trend of advance fee loan scams. These scams target individuals who are having trouble obtaining cash or credit.

Customers are lured by advertisements and direct mail pieces promising guaranteed loans -- regardless of credit history -- for advance fees running between $50 and several hundred dollars.

However, you must pay a processing fee before obtaining the loan. These so-called loan brokers don’t lend money directly; they claim to act as money finders and ask for an advance fee in order to prepare a loan application and present it to prospective lenders. But these firms cannot guarantee loans, despite their promises of unlimited funding sources. In many cases, brokers fraudulently pocket advance fees, make no effort to find the funds promised and the customer loses money.

Recognizing advance fee loan scams -- Advertisements that “guarantee” or promise loans usually appear in the classified section of newspapers and magazines as well as all over the internet. Other advertisements include telemarketing calls or fliers in the mail. In addition, companies normally use delivery methods other than the United States Postal Service, such as overnight services, to avoid prosecution by postal authorities.

Protecting yourself -- According to the Federal Trade Commission’s telemarketing sales rule, if someone guarantees or suggests that there is a strong chance they can get or arrange a loan or other form of credit for you, it is illegal to ask you to pay, or accept payment, for their service until you get your credit or loan.

Always remember:

Just because a company advertises in a recognized media outlet does not mean the company is 100 percent legitimate.

Legitimate lenders never guarantee to get you a loan or credit card before you apply, especially if you have bad credit, no credit or have declared bankruptcy in the past.

Never give your credit card number, bank account information or Social Security number over the telephone or Internet unless you know with whom you are doing business.

If you do not have the offer confirmed in writing or in hand and are asked to pay, Do not do it! It is fraud and it is against the law.

If you cannot obtain money or credit from conventional sources close to home -- such as a bank or credit union -- it is unlikely to be found through a classified advertisement, a telemarketing call, a toll-free number or a flier sent in the mail. Ask yourself: Why would far-away lenders be more likely than local financial institutions to provide you with money?

And remember: a company’s 100 percent money back guarantee is no good if the company closes its doors or cannot be located.

If you feel you have been subject to an advance fee loan scam, contact the Federal Trade Commission at and the BBB at

Kelvin Collins is president/CEO of the Better Business Bureau of Central Georgia and the CSRA Inc.