So-called advance-fee lenders are increasingly preying on consumers heading into the holiday season, warns the Better Business Bureau.
Advance-fee lenders often target people with poor credit scores – either through direct calls or advertising.
In exchange for an upfront payment or two, the firms promise people a preapproved loan or debt-consolidation services.
The firms then take the upfront fees – ranging from several hundred dollars into the thousands – but often never deliver the loan or debt consolidation.
“The ‘advance-fee season’ is early December because people typically want more money for the holidays,” said Susan Liehe, a spokeswoman for the Denver/Boulder Better Business Bureau.
The Better Business Bureau specifically warns consumers about a firm with a Denver mailing address called First Star Credit.
Consumers from throughout the nation have filed 11 complaints against the firm, including eight that Five Star has yet to respond to, the bureau said.
The company’s registered owner, Jeff Evans, could not be reached by The Denver Post for comment.
Jonathan Jones, of Morehead, Ky., complained to the Denver/Boulder bureau about Five Star in a Nov. 22 letter.
Jones wrote that he sent Five Star a $328 money order in October, with the company promising to consolidate his credit card debt. Jones says that never happened.
Laura Berger, of New York, complained to the BBB that First Star called her several times a day for weeks.
“I want them to stop calling,” read the April letter, “but I also want to know who they are and how they know my credit card information, my address and cellphone number.”
Jan Zavislan, deputy attorney general for consumer protection, said his office is not actively investigating any advance-fee lenders. He said that save for some financial institutions that are exempt, collecting a fee before granting a loan is a misdemeanor under Colorado law.
Better Business Bureaus in other areas, including Utah, Iowa and Ottawa, Canada, have also recently issued warnings to consumers about similar lenders.
Liehe said advance-fee lenders often approach young, low-income people who are in debt or don’t have experience with the lending industry.
“If you do not have the loan offer in hand – or confirmed in writing – and you are asked to pay, don’t do it,” Liehe said.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
