Consumers are again being warned of phony loan offers and reminded that legitimate lenders will not approve loans in exchange for a fee.
Several consumers reported losing more than $2,000 each after trying to obtain a loan online. The consumers were told they were approved for loans but first had to pay advance fees using prepaid cards or money transfers. Although the consumers provided the payments, they never received the loans.
The initial fee in a loan scam is not the same as a down payment or other cost associated with a legitimate loan. Scam lenders do not check consumers’ credit history; they just promise a loan in exchange for advance payment.
Scam lenders use various phony reasons to explain why consumers must make upfront payments, such as:
- To prove the consumers can make the monthly payments;
- For processing fees, taxes, or insurance;
- To compensate for a low credit score;
- For closing costs or bank fees; or
- To secure the loan.
To protect themselves from scams, consumers should check for complaints with the Ohio Attorney General’s Office and Better Business Bureau. They also should be skeptical of lenders that ask for payment via money transfer or prepaid money card. These are preferred payment methods for scam artists, because once the money is sent, it is difficult to trace or to recover.
Ohio Attorney General Mike DeWine issued the warning. Consumers who believe they have been treated unfairly or who need help detecting a scam should contact the Ohio Attorney General’s Office at www.OhioAttorneyGeneral.gov or 800-282-0515.
“In a typical loan scam, you find a loan for $1,000 to $5,000 but the lender says you have to pay hundreds of dollars upfront to prove that you’re trustworthy,” Attorney General DeWine said. “You send your own money but you don’t receive anything in return. If you have to send money in order to get money, it’s likely a scam.”
In 2014, the Ohio Attorney General’s Office received more than 200 complaints about advance-fee loans or credit cards, including many potential scams. The average reported loss was approximately $500.