Personal Loans and The Federal Trade Commission
The Federal Trade Commission is a government regulated agency created in 1914 to protect consumers against the many types fraud committed by criminals including dishonest loan scams. The Federal Trade Commission has been given a lot of authority by the congress and uses this power to act on behalf of the nation’s consumers as well as legitimate businesses.
The Federal Trade Commission or FTC, has many divisions that include Privacy and Identity, Consumer Protection, Financial, Marketing, and Advertising Practices, Consumer and Business Education and several others. The Financial Practices Division is devoted to personal loans as well as other types of lending issues.
The FTC investigates thousands of lending scams every year with the average victim losing about $450. Most victims tend to be under the age of 30. Young people can be more impulsive and in a hurry and will take whatever offer they are given without thinking twice. Something to keep in mind is that it is illegal for a lender to charge fees for bad credit or any other type of fee before the application is approved. This is one of the ways these criminals get their money, they guarantee the loan but it must be secured with an initial processing fee of a few hundred dollars. Once they get their money they’re gone.
Online loan scams are perhaps the hardest to stop because with sufficient knowledge of computer networks and systems these criminals can easily cover their tracks and disappear without a trace. Your best defense against personal loan scams is research. When negotiating a loan be sure to check out your lender with the Better Business Bureau. You should also do extensive internet searches for reviews or warnings about the online company you are considering. Keep in mind that creating a nice, authentic looking website is very easy and do not let their graphics sway your skepticism. Check out the age of their site at whois.com. Online predators tend to be fly-by-night rip off artists that put up a site and try to make as much money in as little time as possible before moving on to the next scam. A site that is less than a year old should be a approached with great caution if not avoided all together.
When a consumer becomes aware that they are a victim of criminal practices by a lender they are urged to report the infraction to the FTC as well as local authorities immediately. Failing to do so enables the preator to continue taking advantage of others. Many people choose not to file complaints due to fear of getting involved with a government agency or because they are embarrassed. However it is very easy to report illegal lending practices. Reporting an online or offline lending scam can be done on the internet, over the phone or in writing though writing a letter is much slower than the internet or a phone call. The FTC will get information about the situation from you and conduct an investigation. They can look for patterns with similar reported cases.
If you are in the market for a personal loan it is in your best interest to keep informed about the latest tactics used by internet loan predators and to be on the lookout for any tell-tale signals on websites that offer deals that may seem too good to be true.
