Ohioans warned to be on guard against advance fee loan advertisements

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The Ohio Department of Commerce's Division of Financial Institutions is warning Ohioans to be on guard against newspaper advertisements that promote the availability of loans but fail to identify the name of the company and its locations. The ads only provide a toll-free telephone number.

Advertisements have recently been placed in the Cincinnati Enquirer and possibly other newspapers throughout Ohio promoting the ability to borrow up to $50,000 at eight percent interest for personal, auto and debt consolidation loans. The ad, which contains a fictitious Ohio registration number, says, "Bad credit is OK" and provides a toll-free number.

Complainants to the division are reporting that when they called the toll-free number, they were directed to send a fee to obtain the loan to Maryland or Canada. Some complainants have said that they sent up to $1,000 and have not heard back from the company.

"This ad contains many of the tell-tale signs of an advance fee loan scam," said director of commerce Kimberly Zurz. "Advance fee loan ads prey upon people who are desperate to receive a loan. Ohioans should resist the temptation to send money in advance to these companies on the promise that they will obtain a loan."

In a typical advance fee loan scam, financial information is solicited from the caller and they claim that they can find a private lender to finance a loan. However, before the loan can be processed, they say that the consumer needs to make a down payment or purchase special mortgage insurance. The consumer is then instructed to send between $400 and $2,000 to cover those costs by sending a money order out of state or to Canada.

Ohio law requires mortgage brokers operating in the state to be registered through the Division of Financial Institutions and to include their registration number in any advertisement. "We strongly encourage Ohioans to first check with the Division to learn if a mortgage broker is registered in Ohio," Director Zurz said.

This can be done by conducting a search of mortgage brokers on the Division's Website at http://elicense2-lookup.com.ohio.gov/ or by calling the Consumer Hotline toll free at 1-866-278-0003.