State AG Warns Consumers to be Wary of Advance-Fee Loan Scams

A Baltimore City man applied for a loan on the Internet. An individual claiming to be from the loan company telephoned the man a couple days later and explained to him that due to previous credit problems, he must pay a fee, or “collateral,” in order to receive the loan. The man was instructed to send the money through a wire service to an address in Canada. He was told once the money was received, he would be reimbursed for the wire fees and approved for the loan, which should be direct deposited into his bank account. A couple days later, the man still had not received the loan money in his account and made phone calls to the loan company. After numerous calls, he never heard back. He lost $2,000.00.

Advance fee loan scams, just like the one described above, have been around for years. These kinds of offers often appear in the classified section of newspapers, but also appear on local cable stations, the radio, or the Internet. The advertisements offer “guaranteed” loans or credit, even for people with credit problems and previous bankruptcies. Consumers apply for the loans, and when contacted, they are told they must send money in advance to cover such things as “insurance”, “collateral”, “pre-payment” or other fees the company creates. Consumers are then often asked to wire the money to an out of state address. Once the con artists receive the money, they disappear, and, of course, the consumer never actually receives the loan.

Attorney General Gansler wants Maryland consumers to know that legitimate lenders never “guarantee” loans and legitimate offers of credit never require payments in advance.