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Difference between revisions of "Loan and Credit Scams"
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{{Consumer Law Wikibook TOC}}Bogus loan or credit offers are often pitched to people who need extra money. You may see the ads online, in the classified section of the newspaper, or on bulletin boards. Or you may receive a phone call from a telemarketer. | {{Consumer Law Wikibook TOC}}Bogus loan or credit offers are often pitched to people who need extra money. You may see the ads online, in the classified section of the newspaper, or on bulletin boards. Or you may receive a phone call from a telemarketer. | ||
==Advance fee loan scams== | ==<span class="noglossary">Advance</span> fee loan scams== | ||
You are told you are “guaranteed” or highly likely to get a loan. All you need to do is pay an upfront fee to process the loan. | You are told you are “guaranteed” or highly likely to get a loan. All you need to do is pay an upfront fee to process the loan. | ||
===Facts=== | ===Facts=== | ||
* Bogus fee loan companies don’t send the promised loan. Your fee is not refunded. You get a letter saying that your loan application has been denied. | * Bogus fee loan companies don’t send the promised loan. Your fee is not refunded. You get a letter saying that your loan application has been denied. | ||
* Legitimate lenders never “guarantee” that consumers will qualify before a credit check is done. | * Legitimate lenders never “guarantee” that consumers <span class="noglossary">will</span> qualify before a credit check is done. | ||
===What the law says=== | ===What the law says=== | ||
In BC it is against the law for a company to charge an advance fee to obtain a loan, even if that fee is described as the first or last month’s payment. | In BC it is against the law for a company to charge an <span class="noglossary">advance</span> fee to obtain a loan, even if that fee is described as the first or last month’s payment. | ||
===What you can do=== | ===What you can do=== | ||
* Apply for loans through local banks and credit unions. Know who you’re dealing with. | * Apply for loans through local banks and credit unions. Know who you’re dealing with. | ||
* If you have poor credit, it is unlikely that any legitimate bank or other financial institution will give you a loan. Your credit history is one of the main criteria they use to determine whether you will be able to repay a loan. | * If you have poor credit, it is unlikely that any legitimate bank or other financial institution <span class="noglossary">will</span> give you a loan. Your credit history is one of the main criteria they use to determine whether you <span class="noglossary">will</span> be able to repay a loan. | ||
* If you can’t get a loan yourself, a friend, relative or employer may be willing to apply with you for a loan. Warning: If you co-sign for someone else’s loan, you are equally responsible for the debt. If the other person can’t make payments on time, you can be held liable for the loan and your credit record will be affected. | * If you can’t get a loan yourself, a friend, relative or employer may be willing to apply with you for a loan. Warning: If you co-sign for someone else’s loan, you are equally responsible for the debt. If the other person can’t make payments on time, you can be held liable for the loan and your credit record <span class="noglossary">will</span> be affected. | ||
* Get free or low-cost help with credit problems. If you’ve got bad credit or no credit, get advice on how to build a good credit record. See [[Sources of Help| Sources of Help]] section for places that can help. | * Get free or low-cost help with credit problems. If you’ve got bad credit or no credit, get advice on how to build a good credit record. See [[Sources of Help| Sources of Help]] section for places that can help. | ||
==Bogus credit cards== | ==Bogus credit cards== | ||
Scammers target people who are having credit problems and haven’t been able to get credit cards elsewhere. They claim “guaranteed approval” for a credit card, regardless of your credit rating. They want you to pay an upfront “processing fee” to get the credit card. | Scammers target people who are having credit problems and haven’t been able to get credit cards elsewhere. They <span class="noglossary">claim</span> “guaranteed approval” for a credit card, regardless of your credit rating. They want you to pay an upfront “processing fee” to get the credit card. | ||
===Facts=== | ===Facts=== | ||
* Few victims ever receive credit cards. Those who do get a card discover that there are additional processing and annual fees. | * Few victims ever receive credit cards. Those who do get a card discover that there are additional processing and annual fees. | ||
* In some cases, all you get is a list of banks you can then send an application to. | * In some cases, all you get is a list of banks you can then send an application to. | ||
* In other cases, consumers who gave out their chequing account numbers found money had been debited from their account without their permission. | * In other cases, consumers who gave out their chequing <span class="noglossary">account</span> numbers found money had been debited from their <span class="noglossary">account</span> without their permission. | ||
* In offers that claimed that the card would be issued by an "offshore" bank, the credit card never showed up and the bank didn't exist. | * In offers that claimed that the card would be issued by an "offshore" bank, the credit card never showed up and the bank didn't exist. | ||
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===What you can do=== | ===What you can do=== | ||
* If someone offers you a credit card regardless of your credit history, be wary. It’s probably a scam. | * If someone offers you a credit card regardless of your credit history, be wary. It’s probably a scam. | ||
* Don’t give out your bank account number to anyone unless you intend to have money withdrawn from your account. | * Don’t give out your bank <span class="noglossary">account</span> number to anyone unless you intend to have money withdrawn from your <span class="noglossary">account</span>. | ||
* Ask for written information about a credit card or any other offer to be mailed to you. | * Ask for written information about a credit card or any other offer to be mailed to you. | ||
* If the seller insists that you have to apply immediately, do not apply. A legitimate financial institution will be just as happy to consider your application tomorrow. | * If the seller insists that you have to apply immediately, do not apply. A legitimate financial institution <span class="noglossary">will</span> be just as happy to consider your application tomorrow. | ||
==Wipe your credit report clean== | ==Wipe your credit report clean== | ||
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===What you can do=== | ===What you can do=== | ||
Report suspected frauds to the Better Business Bureau and the Canadian Anti-Fraud Centre (CAFC). See [[Sources of Help| Sources of Help]] section for contact details. | Report suspected frauds to the Better Business Bureau and the Canadian Anti-Fraud Centre (CAFC). See [[Sources of Help| Sources of Help]] section for <span class="noglossary">contact</span> details. | ||
{{REVIEWED | reviewer = [[People's Law School]], 2013}} | |||
{{Consumer Law Wikibook Navbox}} | {{Consumer Law Wikibook Navbox}} | ||
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