Fed warns of questionable loan solicitations

by Center for Personal Finance editors

WASHINGTON (11/5/08)--The Federal Reserve Board alerted the public Tuesday to instances of questionable solicitations aimed at consumers that promise access to personal loans through a nonexistent Federal Reserve lending program.

The scam tells individuals they can work through a broker to access a Federal Reserve program that extends sizable secured loans to consumers. It encourages them to deposit large sums of money into an account, under the guise of a security deposit, to receive the purported loan.

The Federal Reserve advised consumers that it is not involved with the solicitations and does not directly sponsor consumer lending programs.

The Fed urged consumers to verify the legitimacy of potential service providers before entering into a business transaction. Individuals seeking personal finance options should do business only with reputable lenders, and shop around for the most favorable loan terms, the Fed said.

For more information, use the link or call the Federal Reserve Board Help Center at 1-888-851-1920.

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