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LOAN FRAUD

Loan fraud comes in various disguises - advance fee loans, easy debt elimination scams, instant credit repair schemes and mortgage refinance fraud - to name a few. In most cases, the person only wants to steal your money - which will cause you further financial stress. Sometimes, the scammer will use the personal and financial information that you freely provided to them to commit Identity Theft by applying for loans in your name.

Following these guidelines will help you stay out of the hands of loan scams:

  • Never provide your personal or financial information for any loan application unless you know that the company is legitimate. Check the company's reputation first with consumer sites, the state licensing and regulatory agency that the business is based in and/or with the Better Business Bureau.
  • Be wary of unsolicited calls, emails or letters offering you a loan. If the credit offer sounds too good to be true, it's probably a scam.
  • Never provide an advance payment to obtain a loan. Legitimate companies never require any upfront payments for processing loans. Often, the scammer will take off with your money and your loan never materializes.
  • Be wary of debt elimination scams. These scams often involve too good to be true claims of fixing any credit problem, erasing bankruptcy filings or raising your credit score overnight. Often these tactics are not legal and are practiced by entities that are not a legitimate, registered business. Watch out for any forms that you are required to sign that grant a special power of attorney that authorizes the person to engage in transactions regarding the title of your home on your behalf. In addition, the potential risk of you becoming an Identity Theft victim is high because you may have provided all of your personal information to a fake business.
  • Be careful when asked to send money through a payment processor or asked to send money in the name of an individual (instead of the business).
  • Be careful when dealing with a third party loan broker. These entities offer to do all of the loan application work for you based on a commission. Make sure that you know that the information about you being supplied to prospective creditors is honest and accurate, and that you are made fully aware of the terms and conditions of the loan being offered before you sign.
  • Do not take a loan from a company that provides a guarantee that an application will be approved. Real companies will never guarantee the success of an application before they have performed a credit check.
  • Never be pressured to wire funds. You can easily wire the funds once you have verified the company.

If you have been victimized by a loan scam, it is essential that you report it. If you decline to report the fraud due to embarrassment, you only leave the door open for the fraudsters to strike another victim. File a complaint with your local FBI Field Office and/or the Federal Trade Commission.

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