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Front Page » November 25, 2008 » Carbon County News » Consumer protection division issues fraudulent advance fe...
Published 2,095 days ago

Consumer protection division issues fraudulent advance fee loan scheme warning


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The Utah Division of Consumer Protection frequently receives complaints from individuals residing at locations across the state who have lost money to scam artists promising guaranteed loans in exchange for an up-front processing or application fee.

By the time the consumers realize that they have fallen victim to a scam, the application fees are lost more often than not, explained the state agency.

Advertisements for the fraudulent advanced fee loans typically appear in classified sections of newspapers, magazines and tabloids, cautioned the consumer protection division.

But the advanced fee loans can also be marketed on the Internet or broadcast on the radio and television. 

The scam artists usually target people who are out of work or who have poor credit ratings, pointed out the consumer protection division. 

Many times, the people who seek the types of loans are in a desperate financial condition and view the offers as a last hope.

According to the consumer protection division, the majority of the up-front fee loan schemes include several common characteristics.

An individual responds to an advertisement, usually by calling an 800 or 900 telephone number.

The company will promise or strongly suggest that a loan will be provided for an up-front fee regardless of the applicant's credit record. 

The advance fees sometimes total several hundred dollars, noted the state agency.

The promise is usually made that the fee will be credited toward the repayment of the loan or refunded if the application is denied. 

Often, the scam artists claim that the up-front fee is for credit insurance.

The unwary consumer may wait for several weeks or months only to find out the loan has been denied and the fee is not refundable, regardless of earlier promises, noted the state agency. 

Or the consumer may never hear from the company and ever learn that money is being withdrawn from bank accounts or credit card charges are being made with information provided in the loan application.

It is important for Carbon County residents to recognize an advance-fee loan before becoming involved with the potential scam, stressed the consumer protection division.

The state agency cautions local residents to beware of:

•Loans requiring large up-front fees.

Even if a refund is promised, the operator may have no intention of honoring the pledge.

•Guaranteed loan offers.

Legitimate lending organizations generally require a minimal credit level for loan recipients.

•Requests to send applications and fees through a delivery business other than the United States Postal Service. 

The ploy is used in an effort to avoid postal inspectors and possible mail fraud charges, explained the state's consumer protection division.

•Companies operating from different states. 

In almost all scams, operators seldom conduct business in home states, which makes it more difficult for people to obtain reliable information about the company, advised the consumer protection division. 

The local scam operations also change locations frequently in an effort to avoid detection and criminal prosecution. 

The scam artists may also use mail-drop boxes and might not work from the state to which consumers sent the loan application.

•Advertisements that direct consumers to call an 800 or 900 telephone number. 

Some 800 numbers direct consumers to call a 900 number. Consumers may also be switched to a 900 line without their knowledge, according to the state agency. 

Charges for 900 number calls have been reported to be more than $50 for a single call, continued the consumer protection division.

A company that advertises through a recognized medium or offers a money-back guarantee is not necessarily legitimate, pointed out the consumer protection division.  A guarantee is only as good as the organization behind it. 

Carbon County residents should make sure that the company they are dealing with is bonded or has a trust account established in Utah, concluded the consumer protection division.

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Carbon County News  
November 25, 2008
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