If you're in a financial bind, an Internet connection may be all that's separating you from quick cash. Type "I need money" into a search engine, and ads purporting to solve your financial woes will fill up your browser screen. While some of these sites may have a legitimate solution to your problem, consumer advocates warn that others may put you in the bull's-eye of unscrupulous lenders or, even worse, fraudsters.
At the heart of the issue are lead generation websites, which connect companies with consumers who are interested in their products or services. Say you want a debt consolidation loan. A lead generation site might offer to connect you to potential lenders once you provide basic information about your needs and an email address or phone number for interested lenders to follow up with you.
"Getting multiple parties to compete for your business is a very good thing for consumers," says Paul McConville, chief revenue officer of LeadID, a company that provides technology solutions to lead generation firms.
However, while the premise might be good, some lead generation sites do not act in consumers' best interests, consumer advocates say. "There are ethical players and there are less ethical players," says Pam Dixon, executive director of the World Privacy Forum. If consumers stumble upon the wrong lead generation site, they can run into problems.
Your data opens the door
Once consumers enter their information and express a need for cash, where that data goes next is often a mystery. "Sometimes you enter your data into a lead generation website, and they will sell it to another lead generator who will sell it to another lead generator who will eventually sell it to some lenders," says Aaron Rieke, director of Tech Policy Projects for Upturn, a technology policy consulting group.
Other times you might not be connected with the best lenders for your situation. "You go to the site and you don't realize that it's collecting information about you to sell it not to the company that's going to provide the best product for you, but the one that thinks it can make the most money on you," says Ed Mierzwinski, consumer program director for the consumer group U.S. PIRG.
Some lead generation companies will take the information you provide and look up other public information they can find about you to create a more well-rounded profile, Mierzwinski says. They can then add your profile to a list of other people who've sought out financial help and sell it as a collection of financial chumps just waiting to be duped.
Once you're identified by data brokers as somebody who is in financial distress, you could start getting hounded by telemarketers offering subprime and predatory loans, Dixon says.
In fact, a 2015 report by Upturn estimated that online payday lenders get as many as 75 percent of their customers through lead generation. Not only that, but the report found that consumers in states where payday lending is illegal were able to get access to payday loans through lead generation sites.
Then there are lead generation sites that are downright criminal. Such sites don't just ask you for a phone number or an email address, but rather solicit such information as driver's license numbers, Social Security numbers and even bank account information.
At an October 2015 workshop on lead generation held by the Federal Trade Commission, FTC attorney Michael Waller described a scam in which a company purchased consumers' information from lead generation websites and used it to steal money from their bank accounts.
Why would someone risk entering such sensitive data? "People who end up on a loan lead generation website are probably pretty desperate at that moment in time," says Rieke.
The face behind the site
Another problem some consumer advocates have with lead generation sites is that in many cases you don't know who is behind them. Many companies pay individuals to set up lead generation sites and pass along prospects "so what you have is people that could be living in their parents' basement running these websites, collecting people's sensitive financial data just to make a little bit of money," Rieke says.
That's not to say that all lead generation websites are bad. The vast majority are looking for consumers who are legitimately interested in their services, McConville says, such as lead generation sites for car insurance, senior care facilities and more.
There are also different types of lead generation sites, says Jonathan L. Pompan, a partner in the Washington, D.C.-based law firm Venable LLP, who counts lead generation companies among its clients. "There's a danger in painting with a broad brush that all lead generation carries some risk because that's simply not the case," Pompan says. For example, some lead generation companies simply give consumers information so they can contact a business themselves.
While some of these sites can save you time and energy when looking for a particular product or service, do your homework and take the following precautions:
Know who you're dealing with. If you're looking for a loan, "Try to figure out whether you're dealing with a real financial institution or a company that's collecting your data to sell it to a financial institution," Rieke says. Also stick to lead generation companies that you've heard of and do a search with the Better Business Bureau or online to get a feel for its reputation among consumers.
Never get too personal. Most lead generation sites won't ask for more than a name and a way to get in contact with you. "It's when you get to the radioactive material like Social Security or banking or credit card information -- that would be a red flag," says McConville.
A lead generation site can help you to make an educated decision about a financial product or service. However, if the site seeks sensitive data or you're worried about where your information will ultimately end up, you may be better off looking elsewhere, says Mierzwinski. "My advice to consumers is just don't do it."