Consumer Advocate

Sign up for newsletters and other news
Media > Newsletters > Consumer Advocate > October 2021 > Be on the Alert: Advanced-Fee Loan Scams

Consumer Advocate RSS feeds

Be on the Alert: Advanced-Fee Loan Scams

Have you had difficulty obtaining a loan? Scammers could target you with an advanced-fee loan scam. Typically, they look for people with poor credit who have recently applied for loans, offering them a guaranteed loan or access to a list of potential lenders who aren’t as concerned with credit scores, as long as the individual pays in advance. These scammers claim to work for a legitimate lending institution, such as a bank or credit union, but none of these assertions are true. Once the fee is paid, the scammers stall the process with endless excuses or disappear altogether.

Consumers throughout Ohio are reporting losing money to advanced-fee loan scams. In some cases, they have sent hundreds of dollars out of the country for loans that are nonexistent.
For example, a Central Ohio consumer received a call saying she qualified for a loan worth up to $5,000. In order to receive the loan, she first had to send $300 via wire transfer to India. She sent the money, but never received the loan. It was all a scam.
In an advance-fee loan scam, con artists ask for upfront fees in exchange for a loan or line of credit. Victims often are asked to wire money to another country to secure the loan. After sending the money, however, victims receive nothing.  
Requests for wire transfers in exchange for a loan almost always signal a scam. 
Signs of an advance-fee loan scam include:
  • Calls or emails offering loans.
  • Claims of “guaranteed” loans or lines of credit.
  • Demands for advance fees, such as a “bank processing fee.”
  • Requests for money sent via wire transfer.
  • Companies that fail to provide loan information in writing.
In a related scam, consumers are contacted by “debt collectors” who demand payment on past-due loans. Consumers who receive these calls frequently say they had applied online for a payday loan but never received the loan and do not owe the money.  
Sometimes the callers threaten consumers with arrest or jail time if they refuse to pay.  
If you receive calls demanding that you pay a debt, tell the callers to provide written verification of the debt. If they refuse, don’t trust them and don’t send any money. The law requires debt collectors to provide verification that you owe a debt.
Protect Yourself
Not sure if the lender you’re talking with is legitimate? These steps can help you protect yourself against scammers.

Check to see if the lender is registered in your state. Lenders must register where they do business. In Ohio, contact the Department of Commerce, Division of Financial Institutions to find out if a lender is registered.

Search online. Type the company’s name into a search engine with words like “review,” “complaint” or “scam.” You can search for phone numbers to see if other people have reported them as scams.

Hang up on robocalls. If you pick up the phone and hear a recorded sales pitch, hang up and report it using the Ohio Attorney General’s Unwanted Call Notification Form. These calls are illegal. Don’t press 1, 2 or any number to get off a list or speak to a person. That just means you’ll get even more calls.

Don’t pay for a promise. Whether someone asks you to pay in advance for a credit card, loan offer, debt relief, mortgage assistance or a job, walk away. No one legitimate will ever ask you to pay for a promise. If they do, it’s a good bet it’s a scam.

Get help dealing with debt. You may have more options than you think. Nonprofit organizations in every state offer credit counseling services that often are free or low-cost. Learn more about possible options for coping with debt here.

Consumers who suspect an unfair business practice or want help addressing a consumer problem should contact the Ohio Attorney General’s Office at or 800-282-0515.