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The information provided on this post does not, and is not intended to, represent legal advice. All information available on this site is for general informational purposes only. If you need legal help, you should contact a lawyer. You may be eligible for our free legal services and can apply by calling our Covid Legal Hotline at 1-844-244-7871 or applying online here.

I received a check in the mail made out to me.  Should I cash it?

Not necessarily.  Be sure to read all the fine print to determine whether the check is a refund from a reliable agency such as the Internal Revenue Service or it is a common “Live Check Loan.”

What is a live check loan?

A live check loan is a loan offer sent by lending agencies to pre-approved borrowers offering a small loan, usually $500-$2500, typically at very high interest rates often above 25% APR.  This loan offer will include a check made out to you ready to cash.  Live check loans should also include: a disclosure of the loan fees, the annual percentage rate (APR), the payment schedule, the loan agreement, a privacy notice about the sharing of your personal information, your right to exclude your name from future offers – called an opt-out notice, and contact information for the sender.  Upon cashing or depositing the check, you are accepting all the terms and conditions attached to the loan.  Be sure to read the fine print included with this check to determine whether this loan is right for you.

Is this pre-approved loan offer a scam?

Scammers sometimes send fake loan offers via mail, email, or text. These may look very similar to actual live check loan offers, but they are used to get your personal or financial information in order to commit identity theft or fraud.  If the loan asks you to send money, personal, or financial information in return, it is most likely a scam.  Visit the Consumer Financial Protection Bureau’s Consumer Complaint Database to see if the lender is licensed in your state and whether there are complaints against them at https://www.consumerfinance.gov/data-research/consumer-complaints/ If you think this offer is a scam, you can report it to the Federal Trade Commission at https://reportfraud.ftc.gov/#/

How does a live check work?

If you want to accept the live check loan, you must endorse the check by signing the back of the check and cashing or depositing the funds into your bank account. This creates a loan agreement that you must repay with interest in accordance with the payment plan included. If you pay late or do not pay, you may be charged fees along with interest, and the lender may report your debt to a credit reporting agency which could affect your credit score. To reject the loan offer, you should securely destroy—by shredding and throwing away—the live check to avoid potential fraudulent use by others.

How do I determine if I should accept this loan offer?

Live check loans may be convenient since you do not have to complete a loan application or file paperwork. However, live check loans may have much higher interest rates than other loans or credit cards. If you are interested in a loan or line of credit, you should follow these few simple steps:

• Research the lender. Check if the lender is licensed to do business in your state through your state’s bank regulator. Visit the Consumer Financial Protection Bureau complaint database to see if the lender has complaints.
• Read the loan agreement. Understanding the loan’s rates and terms helps determine its affordability. The agreement should detail the total annual cost of borrowing, represented as an annual percentage rate and including interest costs and fees; the number of required payments; and payment amounts.
• Shop around. Compare personal loan rates and terms at credit unions, banks, and online lenders. If you have bad credit, you may be able to get lower rates at federal credit unions, which cap rates on loans at 18 percent. You can also check rates and terms at online lenders. Most run a soft pull on your credit, which has no impact on your credit score.
• Focus on long-term solutions. Create a budget that tracks your spending, which can identify unnecessary spending and help you pay off debt or direct money to an emergency fund. You can then use cash for emergencies instead of high-interest credit.

What should I do with this live check?

If you decide that you want to accept the loan offer, simply endorse the back of the check with your signature and cash or deposit the check to your bank account.

If you decide that you do not want to accept the loan offer, rip up the check and throw it away.  If you do not destroy the check before throwing it away, you risk someone cashing the check in your name and becoming responsible for a loan you did not receive.

How do I stop these unsolicited loan offers?

If you do not want to receive live checks or other unsolicited loan offers, you have the right under the Fair Credit Reporting Act to opt out of future offers for five years or permanently. To opt out for five years, call 1-888-5-OPTOUT (1-888-567-8688) or visit https://www.optoutprescreen.com/?rf=t  To opt out permanently, visit https://www.optoutprescreen.com/?rf=t and return a signed “Permanent Opt-Out Election form,” which they will send after you make the request.

I already cashed the check.  What do I do now?

Upon cashing the check, you became bound to the terms and conditions of the loan offer.  If you cannot afford the payments as described in the offer, contact the lender about possible options to repay your loan.  If you pay late or do not pay without reaching an agreement with the lender, they may charge fees along with interest, report your debt to a credit reporting agency, or take action to garnish your wages or seize your property.