Is this lender legit?

A real lender looks at your application and credit before it says yes. They won't guarantee you a loan before you've even applied. If someone says you're approved before they've seen anything, that's your cue to stop and not pay.

Charging for an application or an appraisal can be perfectly normal. What crosses the line is this: no trustworthy lender claims a fee will lock in your loan. That guarantee is the difference between an ordinary charge and a scam.

This is called an advance-fee loan scam: someone promises you a loan, asks you to pay first, and then there's no loan and no lender. The upfront charge is often described as a processing, insurance, or application fee.

Pay attention to the payment method too. Fraudsters prefer options that are hard to reverse, like crypto, wire transfers, or gift cards. Being asked to pay in one of these ways is a strong signal to stop.

There's also a federal law protecting you when the pitch comes by phone. It's called the Telemarketing Sales Rule, and it means a caller can't legally promise you a loan and then demand payment upfront.

If anyone is pushing you to pay before the money arrives, stop and don't send anything.

Plenty of borrowers come across lenders through an internet search, and fraudsters count on that. They frequently purchase lists of people who looked for or requested loans on the internet, including payday loans and similar products. Getting a call or an email shortly after submitting a form proves nothing about whether that lender is genuine.

It can also be hard to identify and contact online lenders. That becomes a serious problem if you ever need to block them from pulling money out of your bank account.

Unlicensed lenders bring risks of their own. California cautions that they might pull money from your bank account without your okay. On top of that, many operate from another state or overseas, so recovering any money you lose gets very difficult.

Licensing can matter even after you've borrowed. In certain states, a payday loan issued by a lender without a license in that state may be void.

Before giving an online lender access to your bank account, check its license and make sure you can identify and contact it.

Lenders have to register in the states where they do business, so start by checking the license. None of these steps will cost you anything.

1. Request the lender's NMLS number or its state license ID. NMLS Consumer Access is a no-cost site open to the public, listing state licenses for businesses such as home lenders, consumer finance firms, debt operations, and money transfer providers. Searches give the best results when you enter the complete ID or license number, and the site gets updated each business night.
2. Run the lender's name through NMLS Consumer Access. The CFPB recommends it as a no-cost tool for checking whether a company may operate in your state.
3. If nothing comes up, reach out to the state office that licenses lenders or to your attorney general. The state regulator is the government office responsible for licensing lenders. Since certain state agencies don't list every license type there, NMLS doesn't cover everything, so finding no record doesn't settle the question either way. When it comes to payday lenders, the CFPB advises you to contact your state regulator or attorney general.
4. Search the CFPB's public complaint database for the lender's name to see what other borrowers reported, with their identifying details removed.

Complaint figures are useful, but read them carefully. Since the CFPB database isn't a representative sample, the totals don't stand in for a company's whole customer base. A big lender showing lots of complaints isn't necessarily in worse shape than a small one showing only a handful.

A complaint count of zero isn't proof of a spotless record either. When complaints involve banks and credit unions holding under $10 billion in assets, they get referred elsewhere and not published.

Filing your own complaint is an option as well. The CFPB accepts them for payday and personal loans, including installment, advance, and title products, and companies usually reply in about 15 days.

When the payment went out by bank transfer or Zelle, contact your bank or credit union immediately. Do this right now, before anything else.

Then report it to the people who track these scams, since your report helps them build cases:

• Your state attorney general. The CFPB recommends contacting them after a scam, and NAAG can help you locate the right office.
• The FTC at ReportFraud.ftc.gov. What you report there gets shared with over 2,000 law enforcers. Individual reports aren't resolved by the FTC. Instead, they feed into investigations and legal cases.