Advance Fee Loan "Sharks"

Dear New Yorker:

With the rapid development of technology, our society is moving closer and closer to a paperless economy. This makes personal credit even that much more important in our daily lives. Unfortunately, maintaining good credit can be difficult.

Worse yet, scam artists have found a way to reach out to those particularly vulnerable consumers, those with credit problems or no credit history at all, the unemployed, and even those consumers in emergencies who have an immediate need for cash.

The scams -- Advance Fee Loans -- usually "guarantee" or represent a "high likelihood of success" that they can arrange a loan or credit for a consumer, regardless of the consumer's credit history.

The scams differ from legitimate credit offers in one important way -- they require payments up-front, before the lender is identified and the application is completed.

Keep in mind, advance-fee loan scams are oftentimes advertised in recognized media outlets - your local paper, radio station or on cable TV spots. This, however, does not guarantee the legitimacy of the company or their offer.

If you have further questions about advance-fee loans or other credit offers, please contact our office at (800) 771-7755 or visit our office's website at ag.ny.gov.

Don't pay for a promise. It's illegal for companies doing business by phone to promise you a loan and ask you to pay for it before they deliver.

Advance Fees for a loan are illegal -- ignore any offer that guarantees you a loan for a fee paid in advance. Legitimate lenders never "guarantee" or say that you will receive a loan before you apply, especially if you have a damaged credit history or no credit record at all.

Watch those fees! State law limits the total fee a loan broker can assess (after loan approval) to 0.5% of a non-mortgage loan. If anyone tries to charge you more, report it to the Attorney General's office.

Never give your credit card, bank account numbers, or social security number, whether it be asked for over the telephone, by e-mail, or any other means unless you are familiar with the company and know why the information is necessary.

If you don't have the offer in hand - or confirmed in writing - and you are asked to pay, don't do it! It's fraud and it's illegal!

If you have credit or debt problems or concerns about your personal finances, you may want to contact your local non-profit credit counseling agency for assistance. To do so, contact the National Foundation for Consumer Credit at (800) 388-2227 or www.nfcc.org or the Association of Independent Consumer Credit Counseling Agencies at (703) 934-6118 .

For those seeking assistance for paying off debts, be sure to confirm that your non-profit credit counselor is licensed to provide budget planning services in New York State by visiting www.dfs.ny.gov.

If you believe you are a victim of an advance fee loan shark, contact the Attorney General's office at (800) 771-7755 to report the company.

This Consumer Alert was developed with the assistance of the Federal Trade Commission as part of a joint federal/state effort to educate and protect consumers against the growing number of credit schemes. The FTC can be reached at (877) FTC-HELP.