3 Signs Your 'Loan' Is Really a Scam

— -- [This week is National Consumer Protection Week and so The ABC News Fixer is here to share tips all week long to help keep your money safe in some common financial situations. Check The ABC News Fixer homepage at ABCNews.com/Fixer for these and many, many more financial tips.]

What kind of crook would take money from a poor person?

In one of the most despicable – but unfortunately, common – scams, con artists are offering bogus loans to people with poor credit histories who need cash to pay their bills.

It’s called an “advance-fee loan” but it’s not a loan at all. It’s a scam.

These schemes can be quite sophisticated, using fancy websites, loan applications and even fake “loan officers” who are really just in on the scheme. After the scammers collect an upfront payment from the borrower, they disappear – leaving the consumer in even worse financial shape.

The ABC News Fixer has heard from numerous victims of this scam.

Make sure you don’t fall for it by noting these three red flags:

• The supposed lender doesn’t seem to care about your credit history.
• The lender guarantees you’ll get a loan, no matter what.
• The lender claims that you’ve been approved for a loan, but then starts demanding fees upfront for vague reasons like “insurance,” “processing” or “paperwork.”

The Federal Trade Commission says a demand for any upfront fee is a clue to walk away.

If you need to borrow money, be sure to deal only with legitimate lenders that disclose all their fees clearly and conspicuously.

A legitimate lender will take its fees from the amount that you borrow – and not ask you to give them your own money in advance to get a loan.

If you have poor credit, you’ll have a hard time getting a legitimate loan. You’ll need to put in time and effort to rebuild your credit history. If you’re falling behind on your bills, contact your creditors to ask for help and consider getting assistance from a nonprofit credit counseling service.

- The ABC News Fixer

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