THE Securities and Exchange Commission (SEC) has issued a stern warning against what it terms “advance fee loan scams,” in which borrowers are asked to pay upfront fees before receiving their loans.
The SEC emphasizes that no legitimate lending or financing company demands payment before disbursing a loan. The agency clarified that paying an advance fee is not a determinant of a borrower’s creditworthiness.
In a statement, the SEC explained that any fees charged by legitimate lending companies are deducted from the total loan amount.
Borrowers receive the net amount after these fees are subtracted. The SEC strongly advises the public to avoid any company that demands advance payments as a condition for loan release.
The commission highlighted that such practices are indicative of fraudulent schemes designed to exploit unsuspecting individuals.
The SEC urged the public to exercise caution and report any suspicious lending activities to the appropriate authorities
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