Understanding the Advanced Fee Scam
The second type of financial deception we want you to be aware of is consumer fraud, which is the act of illegally deceiving a consumer for financial benefit. There are several different types of consumer fraud, but one increasingly common example is the Advanced Fee Scam. Here's how it works:
You receive a call from a company that you have never contacted, offering you a loan with attractive terms. The caller may represent themselves as calling from a major financial services company. To obtain the loan, they instruct you to purchase a prepaid debit card (frequently a Green Dot® prepaid card or Vanilla Visa® gift card) for several hundred dollars, which they claim will be used to deposit your loan.
They will ask you for the card number to verify the account and transfer the loan funds to you. However, they instead use the card number to withdraw the funds you have deposited on the card, without any intention of ever providing you with a loan. (Often times, they will then request additional fees to resolve alleged problems they have encountered with your social security number, credit report or outstanding issues with the I.R.S.) The Advance Fee Scam often targets victims with poor credit who have recently had multiple loan applications declined, offering them a large loan at a low rate. Remember, if a loan offer comes out of the blue and seems too good to be true, it probably is.
The good news is that you can completely protect yourself against the Advance Fee Scam by knowing what to look for and taking simple precautions. Remember that it is very uncommon for a lender to guarantee that you will receive a loan before you apply, or before they have checked out your credit status, especially if you have bad credit or no credit history at all. Here is some additional guidance on how to protect yourself against the Advance Fee Scam.
- Don't pay money for the "promise" of a loan. Ignore any advertisement or hang up on any cold caller who "guarantees" a loan in exchange for a fee paid in advance.
- Beware of anyone who pressures you to "act immediately" by sending money or personal information.
- Never send money, whether by prepaid debit card, wire or money orders prior to receiving the actual proceeds of the loan. Most lenders won't ask you to send funds in advance, and you will have little to no protection through these methods.
- If you are not absolutely sure who you are dealing with, get the company's contact information directly from their website and call them to make sure you're dealing with the company you think you're dealing with. And if they have an online presence, check there too. In the past, some scam artists have pretended to be the Better Business Bureau or another legitimate organization; on- or offline, you should always make sure you are dealing with a reputable party before you give out sensitive financial information.
How to Respond
At Lending Club, we pride ourselves on providing a safe, transparent online lending experience. Lending Club will never ask you in advance to provide payment for any type of insurance, application fee or fee to obtain a loan. You can apply for a loan for free here.
If you believe you may be a victim of an Advanced Fee Scam in connection with Lending Club, you should immediately take the following steps:
- Do NOT provide account information for a prepaid debit card to an unknown caller. Lending Club will never request this information from you.
- Call Member Support immediately at (888) 596-3157. We can verify the identity of Lending Club employees.
- File a complaint regarding internet-related fraud with the Internet Crime Complaint Center.
- Report the scam to your state's Attorney General. You can find your state's contact information here.