It’s easy to borrow money if you have good credit, and nearly impossible if you don’t. That’s an ugly truth of life, but that’s just how it is. If your name is Bill Gates, you not only have all the money that you will ever need, but you have no shortage of people who want to lend you more. If you are the Average Joe and have a credit score of 500 and a family to feed, you are simply out of luck.

It’s unfortunate that the latter group is the one most frequently targeted by financial scammers, but that’s exactly what has been happening in a new financial scam that seems to be gaining in popularity around the country. Companies are advertising, either via a Website or by calling on the phone, that they can provide loans ranging from $5000 to $100,000 to people who need them. Those who need the money call them and are told on the phone that they need only provide some personal information. This information usually consists of a Social Security number and perhaps a credit card number.  In some cases, the company mails out forms for the borrower to fill out, but often the application process is handled over the phone. The borrowers are all too happy to provide the necessary personal information, all in the hopes of getting a much needed loan. The final step necessary is for the borrower to send fees in the amount of $500-$600 to the company to cover processing and transaction fees.

Once the would-be borrower sends the money, he or she never hears from the company again. There is no loan; the scam is a simple scam designed to steal money from people $500 at a time. If the borrowers are lucky, the $500 is all they lose. In some cases, the losses are far worse, as the “lenders” make use of their personal information to engage in the additional crime of identity theft. Armed with the personal information of their victims, the crooks can spend tens of thousands of dollars of other people’s money by opening new credit accounts in their victim’s names.

These scams, and variations on them, have been around for years, and for good reason - they work. The victims are all too easily swayed by the prospect of obtaining a loan they otherwise wouldn’t be able to get, and they overlook the simple matter of using common sense. 

Here are some things to consider should someone offer you a loan over the phone:

No one is going to ask you for money to give you a loan. Aside from a mortgage, which comes with fees such as appraisals, loans don’t have fees. Why do you need to give the lender money if they are simply going to turn around and give it back? Lenders that ask for fees, especially high fees, such as $500 are out to steal your money.

Never provide personal information to anyone over the phone, particularly if they initiated the call. Ask them to send you paperwork, or offer to visit their office. It’s far better to be safe than sorry when it comes to protecting your personal identification.