Is loan offer a scam?

December 14, 2018

Dear Consumer Ed:

This supposed lending club is offering to loan me $5,000, but they say that since my credit isn’t great, they need to verify my intention to pay by a means I find suspicious. They say they will pay off my credit card balance of $850.00, then I am supposed to go to a nearby store and make a purchase in the same amount. After I do that they say they will lend me the loan money by depositing the $5,000 into my checking account. This makes no sense to me, but if it is a scam, how would they benefit?  I have already given them my credit card information. What do you advise?

Consumer Ed says:

This is a scam. The perpetrator was just trying to get you to provide your credit card information and other personal identifiable information so that he can make purchases using your credit card and/or open new loans or credit card accounts in your name. This “lending club” has no intention of paying off your credit card balance or depositing $5,000 into your checking account. To protect yourself from further financial fraud as a result of this scam, you should:

  • Inform your credit card company that your information has been compromised and that you want to cancel your card and get a replacement. 
  • If you also gave the scammer your bank account information, inform your bank immediately so that they can close or freeze your account.
  • Place a credit freeze on your credit file by contacting each of the three major credit reporting agencies:  Experian, Equifax and TransUnion. With a credit freeze in place, no one – including you – will be able to open a new credit account in your name without first unfreezing the account by providing the PIN number. 
  • Check your credit reports for any irregularities in your credit history, such as new loans or accounts that you did not open.  If you find evidence of fraud, you can dispute it by contacting the appropriate credit reporting agencies. To request your free credit reports, go to annualcreditreport.com.

Submit your own question to Consumer Ed.  Remember…we do not give legal advice. Always consult a lawyer about legal issues.