Working in Cooperation with the Massachusetts Attorney General’s Office
Consumer Alert: Advance-Fee Loan Scams
Issued on June 10, 2010
The Cambridge Consumers’ Council and Cambridge Police Department’s Electronic Crime Unit have seen
an increase in the number of Advance-Fee Loan Scams claiming to operate out of buildings in the City of
Cambridge. These companies typically offer loans over the telephone and claim to have received your
application via a loan that was applied for online. Most companies also have a website, which looks
professional and often boast a company’s credentials.
How an Advance-Fee Loan Scam Works
Consumers are usually contacted by “lending agents” via the telephone, informing them that they have
been either pre-approved or approved for a personal loan. At this point, most companies will fax a
completed loan application for signature. These applications are often modeled after legitimate personal
The lending agent will notify the consumer that in order to receive the loan, two to five collateral payments
must be made due to their low credit profile. Consumers were asked to wire such payments using either
Western Union or MoneyGram to their “loan sponsor” in either Canada or Mexico. Usually after the first
few payments have been wired, a company will contact a consumer and inform them that they will need
additional collateral payments before the loan can be issued due to the risk of lending to the consumer. In
the end, the personal loans never appear.
Signs of an Advance-Fee Loan Scam
A lender who is not interested in your credit history.
Banks and other legitimate lenders typically evaluate creditworthiness and confirm the information
in an application before they guarantee any type of personal loan.
A loan that is offered by phone.
It is illegal for companies doing business in the United States to promise you a loan by phone and
ask you to pay for it before they deliv