September 22, 2013 in Business

BBB Tip of the Week: Online loan brokers

 

The Federal Trade Commission has shut down a phony online loan broker that claimed to be affiliated with a network of more than 120 payday lenders and boasted an 80 percent success rate of securing loans. Instead, the broker websites collected personal and financial information, including bank account information, and began making unauthorized withdrawals in small amounts from consumers’ accounts, totaling more than $5 million.

The FTC and a U.S. District Court froze the assets of the two defendants and halted the operation that consisted of five companies controlling websites with the names: Vantage Funding, Ideal Advance, Loan Assistance Co., Palm Loan Advances, Loan Tree Advances, Pacific Advances, and Your Loan Funding.

The defendants also paid to obtain the financial information of others who never visited the payday loan websites and made unauthorized withdrawals from their accounts as well.

If you are looking for a short term loan, the BBB urges you to consider the following:

• Compare available offers, including those from credit unions, local banks and community business lenders and cash advances from credit cards. Choose the terms that fit your situation best.

• Research the lender at www.bbb.org and through an online search engine to check out its reputation.

• Make a budget of all of your expenses, including big and small.

• If you can’t make a loan payment, call your lender right away. They may be able to offer an extension.

• Once the loan is paid off, consider putting the amount equal to the monthly payment in a savings account. This can be a quick way to build up a buffer for the future.

When asked to share information online, stop and consider if the person or website requesting the information really needs to know.

To file a complaint with the BBB, visit www.bbb.org or call (509) 455-4200. You can also file complaints with the Washington State Attorney General’s Office at www.atg.wa.gov/ FileAComplaint.aspx and with the FTC at www.ftccomplaintassistant.gov.

Erin T. Dodge, BBB Editor

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