Consumers strapped for cash may be willing to turn to unreliable sources for loans and grants. BBB warns consumers to think twice before pursuing a loan offer that is too good to be true.
BBB recently became aware of a company offering personal loans to consumers in need of help. Consumers who contacted this company to learn more told BBB that the company asked for $1,000 upfront to act as “collateral.” The FTC has warned “if you have to pay a fee for the promise of a loan or credit card, you’re dealing with a scam artist.”
Often these scam artists will create professional looking websites designed to tempt consumers into believing they are a legitimate company. However, usually the addresses and other information listed on these websites are not valid.
Here BBB lists common red flags to watch out for:
- The lender’s track record is poor. Consumers should review the BBB Reliability Report™ of any business before any type of transaction is made. A history of unanswered complaints, advertising issues or government action will let consumers know the company should be avoided.
- The lender has little contact information. Companies unwilling to provide an address or phone number should be treated with caution. The contact information that is provided should be researched and validated.
- The lender asks for a money order or wire transfer. These payment methods are especially risky because it is extremely difficult to obtain a refund.
- The lender uses high pressure sales tactics. Advance-fee loans can carry extremely high interest rates and have detailed information in the contract. Consumers should never feel forced to make a decision on the spot and should take time to get everything in writing before agreeing to the terms of the loan.