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Business - Scam Alert

Sunday, May. 03, 2009

Don't pay first for that loan

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THE SCAM: Advance-fee loans

HOW IT WORKS: Looking for a loan or credit card but don't think you qualify? Ads and Web sites that promise them to those who simply pay a fee in advance are scams, says the Federal Trade Commission. People who pay upfront, the government agency says, are more than likely to receive a meaningless application or debit card, but not the promised loan or credit card. The FTC reminds consumers: It is illegal for companies doing business in the United States by phone to promise loans and ask for payment in advance.

WHAT'S AT STAKE: Your money and possibly personal financial information

HOW TO BEAT IT: The FTC says to look for some of these red flags: a lender not interested in your credit history; fees not disclosed clearly and prominently; a lender using a name similar to a respected organization, such as the BBB; a lender that isn't registered in the state; and the requirement of an advance payment.

For a look at past scams, go to www.modbee.com/business/scam.