Federal Trade Commission | consumer.ftc.gov

Advance-Fee 

Loans

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Looking for a loan or credit card but don’t think you’ll qualify? Have you been turned down by a 

bank because of your poor credit history? You may 

be tempted by ads and websites that guarantee loans 

or credit cards, regardless of your credit history. Rule 

number one: Legitimate lenders never “guarantee” or 

say that you are likely to get a loan or a credit card 

before you apply, especially if you have bad credit, 

no credit, or a bankruptcy.

Six Sure Signs of an Advance-Fee Loan Scam

Some red flags can tip you off to scam artists’ tricks. 

For example:

1. A lender who isn’t interested in your credit 

history. A lender may offer loans or credit 

cards for many purposes — for example, so you 

can start a business or consolidate your bills. 

But one who doesn’t care about your credit 

record should worry you. Ads that say “Bad 

credit? No problem” or “We don’t care about 

your past. You deserve a loan” or “Get money 

fast” or even “No hassle — guaranteed” often 

indicate a scam. 

Banks and other legitimate lenders generally evaluate 

creditworthiness and confirm the information in an 

application before they grant firm offers of credit to 

anyone.
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2. Fees that aren’t disclosed clearly or 

prominently. Scam lenders may say you’ve 

been approved for a loan, then call or email 

demanding a fee before you can get the money. 

Any up-front fee that the lender wants to collect 

before granting the loan is a cue to walk away, 

especially if you’re told it’s for “insurance,” 

“processing,” or just “paperwork.” 

Legitimate lenders often charge application, appraisal, 

or credit report fees. The differences? They disclose 

their fees clearly and prominently; they take their fees 

from the amount you borrow; and the fees usually 

are paid to the lender or broker after the loan is 

approved.

And if a lender says they won’t check your credit 

history, but wants your personal information, 

like your Social Security number or bank account 

number? Go somewhere else. They may use your 

information to debit your bank account to pay a fee 

they’re hiding.

3. A loan that is offered by phone. 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. 
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4. A lender who uses a copy-cat or wanna-be 

name. Crooks give their companies names that 

sound like well-known or respected organizations 

and create websites that look professional. Some 

scam artists have pretended to be the Better 

Business Bureau, a major bank, or another 

reputable organization; some even produce 

forged paperwork or pay people to pretend to be 

references. Always get a company’s phone number 

from the phone book or directory assistance, and 

call to check they are who they say they are. Get a 

physical address, too: a company that advertises a 

PO Box as its address is one to check out with the 

appropriate authorities. 

5. A lender who is not registered in your state. 

Lenders and loan brokers are required to 

register in the states where they do business. 

To check registration, call your state Attorney 

General’s office (www.naag.org) or your state’s 

Department of Banking or Financial Regulation. 

Checking registration does not guarantee that 

you will be happy with a lender, but it helps 

weed out the crooks. 

6. A lender who asks you to wire money or 

pay an individual. Don’t make a payment for 

a loan or credit card directly to an individual; 

legitimate lenders don’t ask anyone to do that. 

In addition, don’t use a wire transfer service 

or send money orders for a loan. You have 

little recourse if there’s a problem with a 

wire transaction, and legitimate lenders don’t 

pressure their customers to wire money. 
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Finally, just because you’ve received a slick 

promotion, seen an ad for a loan or credit card in 

a prominent place in your neighborhood or in your 

newspaper, on television or on the Internet, or heard 

one on the radio, don’t assume it’s a good deal — or 

even legitimate. Scam artists work hard to make you 

think they’re legitimate, so it’s really important to do 

your homework.

Dealing with Debt

If you have debt problems, try to solve them with 

your creditors as soon as you realize you won’t be 

able to make your payments. If you can’t resolve the 

problems yourself or you need help to do it, you may 

want to contact a credit counseling service. Nonprofit 

organizations in every state counsel and educate 

people and families on debt problems, budgeting, 

and using credit wisely. Often, these services are 

free or low-cost. Universities, military bases, credit 

unions, and housing authorities also may offer lowor no-cost credit counseling programs. For more 

information, see Choosing a Credit Counselor at 

consumer.ftc.gov.
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For More Information

The FTC works to prevent fraudulent, deceptive 

and unfair business practices in the marketplace 

and to provide information to help consumers spot, 

stop and avoid them. To file a complaint or get free 

information on consumer issues, visit ftc.gov or call 

toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 

1-866-653-4261. 

Watch a video, How to File a Complaint, at 

consumer.ftc.gov/media to learn more. The FTC 

enters consumer complaints into the Consumer 

Sentinel Network, a secure online database and 

investigative tool used by hundreds of civil and 

criminal law enforcement agencies in the U.S. and 

abroad. 
Federal Trade Commission

consumer.ftc.gov

August 2012