In desperate times people often let their guard down, which provides a lethal combination for scammers offering loans to people even if they have poor credit.  You may get a solicitation for a loan through an email, phone call or you may even see it in legitimate media, but you should always beware.  Just because an advertisement for a loan appears in a legitimate newspaper or other media does not mean that the loan offering has been investigated for legitimacy by the media carrying the advertisement.  In fact, in difficult financial times when advertising dollars are hard to come by, the standards of media for taking advertisement seem to drop.  Other times the loan solicitation comes by way of a robocall or text message.

You may be surprised at how fast your sham loan is approved.  All you have to do is to send in an advance processing fee and you are on your way to financial stability.  Unfortunately, the loan is a scam and you end up more in debt when you pay for a worthless loan. In addition, you run the risk of becoming a victim of identity theft because you would have had to provide your Social Security number to the scammer when applying for the bogus loan.

Advance fee loan scams target people who may have bad credit or for some other reason would have difficulty getting a conventional loan.  The scammers promise a loan at an attractive rate and tell you that you are eligible for the loan without even knowing your credit history.  However, the require that you pay an upfront fee that they tell you is for “processing”, “insurance” or some other reason.  Unlike legitimate lenders, the scammers don’t disclose their fees before you apply for the loan.  In addition, it is illegal for a telemarketer to promise you a loan and ask for an advance fee of any kind before you receive the loan.  Robocalls for loans are also illegal and should be ignored.

A recent victim of an advance fee loan scam in Arkansas was solicited for the loan through a phone call and told he had to pay an advance fee of $700 through gift cards before his money would be released.  Of course it was a scam and he lost the money he paid them.


Legitimate lenders rarely ask for advance fees.  They usually deduct fees from the loan amount.  Check with your state’s attorney general or the FTC if you have questions about an unfamiliar lender.  And if the loan requires an advance fee, don’t do it.  Chances are it is a scam.  Also, even if you don’t have to pay an advance fee, always be sure the lender is legitimate before you provide any information such as your Social Security number which could be going to an identity thief who is merely using the promise of a loan as a ruse to obtain personal information from you.

Legitimate lenders are required to register in the states in which they do business.  Check your state’s financial services regulator to determine if the lender contacting you is registered.  The scammers don’t register. Here is a link that will take you to your state’s financial services regulator.

Finally, remember anytime you are asked to make a payment for anything by way of a gift card, it is a scam.  Scammers love gift cards because they are impossible to trace.

If you are not a subscriber to and would like to receive free daily emails with the Scam of the day, all you need to do is to go to the bottom of the initial page of and type in your email address in the tab that states “Sign up for this blog.”