Don’t Get Caught in a Pre-approval Scam



You’ve got mail! And the good news keeps coming, because you’ve been preapproved for a large loan – maybe even a mortgage! Yes, you! It’s a dream come true – until it turns into a living nightmare. 

Here’s what you need to know about preapproval scams and how to stay safe.

How the scams play out

In a preapproval scam, a target receives a letter in the mail, an email or a text informing them they’ve been preapproved, or “prescreened,” for a large loan. The letter often comes with a check that can be cashed by the named recipient. 

Cash that check and you may be playing right into the scammer’s hands. 

The authentic-looking check cannot be cashed unless the recipient shares their personal information. Of course, this means providing a scammer, or a scam ring, with all the info they need to empty your accounts, commit identity theft or worse. In addition, the check may appear to clear but will bounce a few days later. Guess who is picking up the tab for anything you bought with those funds in the meantime? Not the scammer.

Checklist for legitimate preapproval offers

If you have a credit history, you’ve probably gotten preapproval offers several times. Some are legit offers for a large loan. So how can you tell if one of these offers is legitimate or a scam?

First, even though some of these offers may be legit, they’re hardly good for your financial wellbeing. If you cash that check, you’ll be bound by the loan terms, which often have exorbitant interest rates and may demand full repayment quicker than other loans of this kind. 

If you get an offer as described here, look for this information to verify the authenticity of the offer: 

  • Disclosure of loan fees
  • Annual percentage rate (APR)
  • Payment schedule
  • Loan agreement
  • An opt-out notice for future offers
  • Contact information for the sender 

If you’ve been targeted

If you’ve been targeted by a preapproval scam, or a legitimate, but disadvantageous, offer, let the FTC know about it. Next, you have the right to opt-out of future loan offers for five years, or permanently. To opt-out, call 1-888-5-OPTOUT or visit OptOutPrescreen

Stay safe!