Governor's Office of Consumer Protection Warns Consumers to Beware of Loan Scams, Especially During the Holidays

November 27, 2012

ATLANTA, GA – The Governor’s Office of Consumer Protection is warning consumers to be especially alert during the Holiday Season, and not to fall prey to online and telemarketing loan scams. One scenario that has been reported to our office involves a loan advertised online. When the consumer submits an application he/she then receives phone calls from a scammer who claims to be a representative of an out-of-state bank. The scammer informs the consumer that the loan has been approved and explains that he/she must now pay a $120 processing fee via Green Dot MoneyPak card. After the consumer pays the money as instructed, the scammer then asks for $300 for another processing fee. If the consumer pays that fee, the scammer will ask for yet another fee, and so on. Needless to say, the consumer never receives the loan and is now out the processing fees already paid.

Consumers should be aware that it is a violation of Georgia’s Fair Business Practices Act for someone engaged in telemarketing to employ a scheme to defraud another person or to commit theft.  If a bank violates the telemarketing laws, consumers may want to consult a lawyer to learn about potential legal claims against the company.  Consumers should also report the incident to the Governor’s Office of Consumer Protection, as well as the Attorney General’s Office and the Department of Banking & Finance in the State in which the bank is headquartered. These entities may be able to take action if the bank engaged in illegal activities. 

Consumers should remember that when acting in response to a call from a scammer, they may find it very difficult to recover lost money because the scammer is hard to trace.  Georgia consumers should report the situation to this Office and also to the following other government agencies in order to attempt to recover lost money and to spread the word about the possibility of a scam:

 Consumers should also understand that Green Dot MoneyPak funds, according to its website, are not insured against loss.  MoneyPak suggests that its customers treat the money on the MoneyPak like cash—once the MoneyPak is lost, there is no way to trace and recover the money.

The Governor’s Office of Consumer Protection also suggests that consumers consider the following tips when trying to obtain a loan: 

  • Don’t pay up front.  Legitimate offers of credit generally do not require an up-front fee. Any fees are taken from the amount borrowed after the loan is approved. 
  • Don’t fall for promises that you’ll get a loan regardless of your credit record.  If you have poor credit or haven’t established a good credit record yet, it’s unlikely that a reputable company will lend you money. 
  • Do business with licensed companies.  Ask Georgia’s Department of Banking and Financing (http://dbf.georgia.gov) if the lender operating in Georgia has complied with the licensing requirements.  If it has not, then you should not do business with that company.
  • If you can’t get a loan yourself, get a co-signer.  Having a co-signer may allow you to obtain a loan from a reputable lender when you would ordinarily not be able to.  A co-signer, usually a friend or relative, is someone willing to apply with you for a loan.  You and the co-signer would both be equally responsible for the loan payments. 
  • Get all the costs and other details before you decide.  Shop around for the best loan rates and fees.  Research several lenders, and look for consumers’ reviews of the different lenders.
  • Have proof of what you were promised.  Make sure to get the loan agreement in writing or in an electronic form that you can use to document the deal.  You want the deal in writing so you know the precise terms of the agreement and so the lender cannot change the terms after you enter into the loan agreement.