Loan and Debt Scams, and How to Spot Them

Advance-fee loans: pay first, get nothing

An advance-fee scam promises you a loan, often regardless of your credit, then asks for money first: an "insurance" charge, a "processing" or "paperwork" fee, or a first payment to "prove" you can repay. Once you pay, the loan doesn't come, or a new fee appears. The FTC's advice is blunt: any upfront fee a lender wants to collect before granting the loan is a cue to walk away.

• A promise before you apply. Real lenders don't promise you a loan before they've reviewed your application.
• Fees disclosed only after you apply, or explained vaguely.
• Payment by gift card, wire transfer or cryptocurrency. These are hard to reverse, which is why scammers ask for them.
• An unsolicited call, text or social media message offering you a loan.
• No registration in your state. The FTC suggests checking that a lender is registered where you live; a scammer usually isn't.
• Pressure to act today, or to keep the deal secret from your bank or family.

Fake debt collectors

Some callers claim you owe a debt you don't recognize, or a real debt they have no right to collect. A legitimate collector tells you who it is and what company it works for, and must send you validation information about the debt in its first contact or within five days.

• It won't give you a mailing address or phone number.
• It won't explain the debt, or pushes you to pay one you don't recognize.
• It threatens arrest or criminal charges. A real collector can't have you arrested.
• It asks for your bank account, card or Social Security number before sending anything in writing.

Ask for the collector's name, company, street address, phone number and, if your state licenses collectors, its license number, then check them with your state attorney general or regulator. Your full rights are in debt collectors and your rights.

Impersonating lenders, banks and agencies

Scammers pose as your bank, a well-known lender, a loan servicer or a government agency. They may say your loan is approved and needs a fee to release it, that your account is frozen, or that you owe taxes or fines. Caller ID can be faked, and a message can copy a real logo exactly.

1. 1 Hang up or don't reply. Don't use the phone number, link or email the contact gave you.
2. 2 Look up the real number yourself, from a statement, the back of your card or the agency's official website, and call to check.
3. 3 Never pay a government agency by gift card, wire or crypto. The FTC says agencies don't call to demand immediate payment and never demand gift cards.

Since April 1, 2024, the FTC's impersonation rule has let it sue scammers who pose as government agencies or businesses and seek money back for the people they harmed. In 2023, bank transfers made up about 40% of reported impersonation losses and cryptocurrency 21%.

Debt relief scams

People behind on bills are offered fast forgiveness, a promise to settle every debt, or a way to wipe accurate negative items off a credit report. The warning signs are the same as with loans: money up front and promises no one can keep. Debt relief companies that sell by phone can't collect fees before they settle a debt, and only scammers promise to settle all your debts or tell you to stop talking to your creditors without explaining the consequences. Compare the legitimate options in debt settlement vs consolidation.

If you paid or shared your information

If you gave out your Social Security number, report it at IdentityTheft.gov and follow the recovery plan it creates. If you shared a password, change it and turn on two-factor authentication.

Where to report a loan or debt scam

• FTC: ReportFraud.ftc.gov. Reports help the FTC and other agencies build cases.
• Your state attorney general or consumer protection office, which handles scams and unlicensed lenders. Our state pages list each state's lending regulator.
• CFPB: consumerfinance.gov/complaint, for problems with a real lender, servicer or debt collector.

Report even if you didn't lose money: a report with the caller's number, the website, the payment details and copies of messages helps investigators connect cases. Save screenshots before a fake site disappears. Before you deal with any lender, look up its license on NMLS Consumer Access or your state regulator's site; if you're short on cash, start with lower-cost alternatives to payday loans rather than an offer that found you.

Common questions