Advance-Fee Loan Schemes
(Pierre) – Attorney General Larry Long and the Division of Consumer Protection are warning consumers about advance-fee loan schemes.
In a typical scenario, a consumer will respond to an advertisement offering loans. The "lender" then promises to provide a loan, but requires the consumer to wire or electronically transfer an up-front fee. These fees are often called "insurance" "security," or "processing," fees. In other instances, the lender may require prepayment of a monthly installment. "Consumers should be wary of paying up-front fees for a loan," said Long. "That's a huge red flag for a loan scam."
The following characteristics are common to loan scams:
- The lender is based in Canada;
- the lender requests funds to be sent by wire transfer;
- the lender "guarantees" a loan or credit, even if you have credit problems
"It's against the law for any telemarketer that is offering a loan to ask for any fees in advance," warns Long. Consumers who fall for these scams lose their entire up-front payment.
Consumers who have any questions about loan offers should contact the South Dakota Consumer Protection Division at (800) 300-1986 before sending money to advance-fee "lenders."