Last year, 44,020 consumers filed complaints with the Federal Trade Commission regarding advance-fee loans. These loans lure consumers with the promise of a loan or credit card, regardless of an applicant's credit history, and require the payment of a fee in advance. Often, these loans turn out to be too good to be true.
"With advance-fee loans, they take the money and oftentimes, the loan doesn't appear," says David Torok, director of the division of planning and information at the FTC. "Be very, very cautious."
A lender that isn't interested in your credit history but requests personal information, such as a Social Security number or bank account number, is a red flag for an advance-fee loan offer, according to a fact sheet from the FTC.
Other warning signs include fees that are not clearly disclosed and a loan offer made by phone that requires you to pay in advance.
Before applying for a loan, check to see if a lender is registered in your state by contacting your state attorney general's office or your state's department of banking or financial regulation, according to the FTC's website.