Vanessa here, with AllClear ID.  Check out this site. Seems legitimate and  professional, doesn’t it? Now click on any link on that website. You’ll see that it’s a totally fake website – actually created by the Federal Trade Commission – to show how easy it is to get entangled in an internet scam by a so-called online loan company.

It’s easy for a scammer to create a professional-looking website and promise loans to those who’ve had credit issues. And by applying for a bad-credit loan on one of these websites, you make yourself a prime target for identity theft.

Once you enter your personal information on one of these sites, it can be used by or sold to anyone, anywhere. Sometimes sites will act as a “lead generator” and sell the information to other companies. Other times, it will be a front for an advance fee loan company. You’ll be told you have been approved for a loan, but you need to pay the first few monthly payments upfront, or send an “insurance” fee before the funds will be sent to you.  If you pay, it’s unlikely you’ll see that promised loan, and you run the risk of someone using your personal or financial information to steal your identity.

According to the FTC, here are some red flags that can tip you off to a loan scam:

  • A lender who isn’t interested in your credit history. Claims like “Bad credit? No problem” or “No hassle — guaranteed” often indicate a scam.
  • Fees that are not disclosed clearly or prominently. Legitimate lenders disclose their fees clearly and prominently. They take their fees from the amount you borrow, and you pay those fees to them after the loan is approved.
  • A loan that is offered by phone. It’s illegal for companies to promise you a loan by phone, and ask you to pay for it before the loan comes through.
  • A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.
  • A lender who asks you to wire money or pay a particular person. Legitimate lenders don’t ask anyone to do that.

You also want to avoid giving lenders your bank account information or permission to withhold payments from your paycheck. If you do, you’ll most likely find an empty account or no paycheck.

It’s best to double-check any loan offer you receive with the Better Business Bureau to find out if the business can be trusted. It can tell you if other consumers have filed complaints, and it will try to verify the legitimacy of the purported lender.

If you have trouble qualifying for a loan, you do have options. There are nonprofit organizations in every state with trained credit counselors who help people with debt problems. Contact your local BBB for tips on selecting a trustworthy credit counselor.