How to Spot Fraudulent Lenders
There has been a significant increase in the number of fraudsters offering fake bank funds and/or online credit through social media networks such as Facebook or email. Here’s how to spot one:
They’re not worried about your payment history
Reputable lenders make it clear that they need to look at your credit history before approving any fund. They need to know if you have a history of paying bills on time and in full, which will give them some reassurance that you will be honest in repaying the loan. Conversely, fraudulent businesses are not interested in making timely payments. In fact, they seek out high-risk borrowers who are lagging behind in credit payments and, consequently, their high late fees and penalties. Make sure you are working with a lender who is interested in your past financial history.
They’re not registered in your state
Federal Trade Commission (FTC) lenders and fund brokers must be registered in the states in which they do business. If the lender you’re interested in does not list the registered states, you can deal with the debt scandal. Check the lender's website to verify the list of states that do business legally. If you cannot find such a listing, contact your state attorney general's office for further verification. You can also contact your state banking department or financial regulation department to determine if the company is operating legally in your place of residence.
They’re forcing you to act quickly
Do not fall for an urgent request. A feature of personal advance scams is that the offer expires quickly, giving you an immediate deadline to sign up for a fund—perhaps even the next day. Lenders who use such high-pressure strategies are not well off. This is a ploy to make hasty decisions. Don’t allow yourself to be pressured in this way.
They requested your business
Legitimate lenders do not request business by making a cold call to potential customers, sending them letters, or coming to their homes. In fact, according to the FTC, U.S. it is illegal for companies doing business to call potential borrowers and ask them to make payments before issuing a loan or credit card. If a lender approaches you first, either in person or online, they may be a fraud trying to get your confidential banking information. If the lender approaches you, it should only be because you have previously contacted them by online inquiry, by phone call, or by visiting a bank branch.
They don’t have a physical address
Another way to find out if a lender is legitimate is to check if the business has an actual address. Confirm that this is their business by calling the phone number on their website and verifying their address in the mapping software.
Remember, scammers can try to give you a low-cost advance instead of hundreds or thousands of dollars in fees. If you fall into the high-risk category, it is important to be vigilant about any company that promotes a loan product that looks very good to suit your situation. If in doubt, check to see if the company is licensed in your state or contact your state attorney general.