An overview of the main types of scam we deal with and the basics of how to avoid being a victim of a scam.
#12234 by Clair Tue Jul 28, 2009 9:17 am
With the downturn in the economy, there has been a significant rise in the number of loan scams reported here in the past year. Here is an overview of Advance Fee Loan Scams and what to do if you are a victim.

No legitimate lender would tell you to wire money to them in advance of a loan, for any reason. Be smart. Be responsible. ©

Two Warning Signs of a Loan Scam:

1. Requests for money to be sent in advance to cover "processing", "application", "insurance", or the "first month's payment" are a red flag of loan scams. Legitimate companies usually do not ask for expenses to be paid upfront, but deduct these fees from the total amount of the loan granted.

2. Requests that you "wire" or "send" money, as soon as possible to a large U.S. city or to another country by a money transfer service such as Western Union or Moneygram.

Basic Outline of How the Scam Works:

• Be especially wary of unsolicited calls, e-mails or letters offering you a loan. While the scam often starts when somebody is looking for a loan on the internet and happens upon a fake loan company website or online advertisement placed by the criminals; it can also begin when you respond to a newspaper ad, unsolicited email, letter or telephone call. There are a few cases reported where the scammers have hacked into the databases of legitimate lending organizations.

• Fake loan companies often use names that sound like legitimate companies, so consumers think they are dealing with a widely known and reputable lending organization. They often use toll-free 1-800- or 1-900- telephone numbers.

• Once contact has been established you are asked to fill out an application and either fax or email it back to the “company”. The application asks for personal information such as your Social Security number and bank account details.

• You are quickly told that your loan is approved, often with no mention of a credit check. Or you may be told that they have found a company that is willing to handle your loan.

• After you are notified that the loan is approved, you are instructed to pay a fee in order to receive the money. They might say it is an insurance payment, legal expense and/or collateral/processing charge; or, that you need to make a few monthly payments upfront. This is the Advance Fee.

• You are instructed to wire the money to a person through Western Union or Money Gram. For loan scams originating in the US, the money is often wired to a person in Canada. Occasionally the payment is made through a bank transfer.

• The scammers claim that once the fee is paid the loan amount will be transferred into your bank account or that you will receive a check the next day.

• Of course, the funds never do get transferred to your account or the check never arrives.

• The scammers then say that another fee/payment is required or that the lending company changed its mind and they will need to find another lending company. Again you are asked to send via a wire transfer.

• If the victim decides to cancel the loan after the advance fee is paid, the scammers usually say that a refund will be made “next month”. A refund never arrives and eventually the telephone number is disconnected and/or the website closes and the victim is left with no way to contact the company.

For more information:

• The FTC warning on Advance Fee Loan Scams:
“You may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history. The catch comes when you apply for the loan or credit card and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, that could be a tip-off to a rip-off. If you’re asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you’re dealing with a scam artist. More than likely, you’ll get an application, or a stored value or debit card, instead of the loan or credit card.”

• Direct Lending Solutions:
"Advance fee loans often take advantage of the most vulnerable members of our society. Adding insult to injury, these slippery characters often gather enough personal information from their victims to make them candidates for identity theft as well."

What you should do if you are a victim of a loan scam:

• Report the crime to your local police department. They will probably not be able to help you get your money back, but a police report is needed for insurance and income tax purposes.

• In the US, report it to the FTC: visit or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. In Canada, here is the link to Reporting Economic Crime Online: Here is a link to the Met Police e-Crime unit for victims in the UK: and to the ConsumerDirect website:

• Report it to the FBI. Here is a link to the Internet Crime Center:

• If you gave the scammers your bank details, contact your bank immediately and tell them what happened. Also mention that you could become a victim of identity theft. Never give anybody your bank account details or identification information such as your Social Security number over the telephone or through an email, unless you are 100% sure they are who they claim to be.

• If you have given them your ID/drivers license/social security number you are likely to become a victim of identity theft. You may need to get a new ID or get that form of ID fraud flagged by the issuing agency. See the FTC website for more information on identity theft:

Who is online

Users browsing this forum: No registered users and 0 guests