“Getting into a financial bind is no fun at all,” says Carmen, of San Antonio, Texas. “I once pawned a bunch of my favorite CDs and couldn’t afford to get them out again without missing a car payment. I lost most of my classic rock and had to buy the White Album again.”
Trying to make ends meet, she says was all she was trying to do. But once she got involved in the bind, she found herself getting in deeper and deeper debt.
“I’m sure if I’d had a call out of the blue offering to loan me a few thousand dollars to pay bills I would’ve been tempted — until they asked me to pay hundreds up front,” she says. “Major red flag.”
That’s what Better Business Bureau calls an advance fee loan scam. The advance fee loan scam is a simple one. In the United States, per Federal law it is illegal for any business to ask for up front fees for loans. These fees are often referred to by a host of different names, such as taxes, processing fees, insurance, or collateral. Regardless of what they are called, these fees are illegal.