BBB: Borrow money without borrowing trouble

Posted at 10:35 AM, Jul 02, 2019
and last updated 2019-07-02 14:33:59-04

CORPUS CHRISTI — For some consumers, a short-term loan to pay bills, address emergency repairs or even refinance a home may be a good option. However, the Better Business Bureau is alerting borrowers to a growing scam that involves upfront payments for a loan that might never show up.

How does this scam work?

In this con, advance fee loan brokers promise a "guaranteed" loan, no matter how bad a consumer’s credit history is. But once a "processing fee" is paid to get the money or lock-in a low interest rate, the loan never comes.

In the United States, it is illegal for companies doing business by phone to promise a loan and require payment before they deliver. A San Antonio woman lost over $10,000 after falling for this scam in June.

Spotting the scam is easy when you know what to look for, including:

Vague or unclear fees charged before you get the money. There are often fees charged for loans: application fees, appraisals, credit report fees. A real lender will post those fees prominently and collect them from the money they are lending you, but a fake lender may try to collect them as a condition for you getting money. Any up-front fee you need to pay before getting the loan is a cue to walk away.

Guarantees and unusual payment methods. Real lenders never guarantee a loan in advance. They will check your credit score and other documents before providing an interest rate and/or loan amount, and will not ask you to pay an upfront fee. Fees are never paid via gift cards or by wiring money. Unusual payment methods and payments to an individual are a big tip off.

As always, do your research.

Scammers try to trick you by pretending to be from official or trustworthy institutions (including Better Business Bureau or your current lender). Contact the agency directly to check that the program is real. Lenders and loan brokers must register where they do business.

To verify registration, check the Texas Attorney General’s office or review a company's profile at That is where you may also report a scam with the BBB Scam Tracker.