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Loan Scam Alert

Beware of Loan Scams Asking for Payment Up Front

By Sharon Secor

Direct Lending Solutions Staff Writer

 

*** Direct Lending Solutions never requires upfront fees for any service***

Note: If someone claiming to be with our company asks for advance fees, it is a scammer trying to use our good name to steal your hard earned money. Please do not become a victim, never send money to anyone in advance of a loan

Advance fee loans often take advantage of the most vulnerable members of our society. These shady companies often promise large unsecured loans to people who are unable to have a loan approved through traditional financial institutions, or take advantage of trusting souls with little financial experience. Armed with a smooth as silk sales routine and a complete lack of conscience, these scam artists often steal amounts that range from hundreds to thousands of dollars from unsuspecting consumers. Adding insult to injury, these slippery characters often gather enough personal information from their victims to make them candidates for identity theft as well. To avoid becoming a victim of this type of fraud, please read the information below along with these scam stories from our visitors.

Loan fraud warning signs:

  1. Be especially wary of unsolicited calls, e-mails or letters offering you a loan.
  2. 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 lenders ask for these things to be paid before a loan is disbursed.
  3. Once you fall for a loan scam, the greedy thieves may ask for even more money by telling that the original amount was erroneous, insufficient upon a second look at your credit, or that you will need to send payment for a second company to complete the loan process.
  4. Requests that you "wire" or "send" money, as soon as possible to a large U.S. city or to another country, such as Canada, England, or Nigeria, by Western Union, Moneygram, or similar means.
  5. Read the loan scam stories sent in from our visitors.

 

Phone Numbers: Contrary to popular belief, the lack of a listed phone number on a website is NOT a warning sign of fraud. In fact, scammers use toll-free numbers all the time. Many legitimate websites operate without published phone numbers for a variety of reasons, including limited human resources. Further, scammers will often create a temporary website AND use a valid (often toll-free) phone number (see our loan stories). Therefore, do not use the existence of a published phone number as an indicator of authenticity.***

Some examples of Toll-Free Numbers associated with loan scams reported to us:

  • 866-904-4719
  • 866-909-1527
  • 866-850-8031
  • 866-323-3778
  • 866-437-4927
  • 866-236-7309
  • 866-503-4942
  • 888-233-4610
  • And many, many, many more. With these scams, you never know who you are really talking to or where you are really calling. Report others. Again, as we stated above and restate here: do not use the existence of a published phone number as an indicator of authenticity, and do not use the lack of a published number as an indication of fraud. Use your common sense, and simply do not send anyone money up front for a loan.

 

If you have been scammed? Report It to:

  1. The FTC
  2. The FBI
  3. PhoneBusters (to report the toll-free numbers being used in Canada)
  4. Your local police (but don't automatically assume the company name and address on your documents are legitimate. Remember, the scammers use fake addresses, those of REAL companies, or random residential addresses far away, in order to hide their operation)
  5. Political representatives

 

How Advance Fee Loan Scam Artists Find Their Victims

You may be on their list. If you have applied for loans lately, you can be assured that your need for financial assistance has been made known to others besides the company to which you have applied. Often, such consumer information is sold by the credit reporting agencies, passing into hands far and wide. This practice makes it easy for unscrupulous companies to find potential victims for scams like advance fee loans. Be wary of unsolicited offers promising guaranteed loan approval made by mail, phone, or email, especially if personal information is requested. Never give out any personal information, such as your social security or bank account numbers, unless it is to a trusted company with which you have initiated contact.

In other cases, the consumer may come across an advertisement that offers loans, often assuring the reader that poor credit or no credit is not a problem. Commonly appearing in classified sections of newspapers or posted on the Internet, these ads are often placed in very reputable publications or on respected web sites in an attempt to lend credibility to their claims. Others have used the names and logos of well-established financial institutions, counterfeiting their ads but inserting their own contact information, leading the consumer to believe they have placed a call to a legitimate lender.

The Typical Advance Fee Loan Scheme

There are many variations of the advance fee loan scam, but the basic steps remain the same in most of these schemes. First, the consumer is assured that they have qualified for an unsecured loan, usually for a large sum of money. Often, these consumers will be sent authentic looking documents and loan contracts to convince them that this is indeed a legitimate offer. Many times, these documents are embossed with fraudulent logos and names stolen from reputable lenders, helping to convince the consumer that this company can be trusted.

One consumer sent us the following as the "acceptance email" she received:

Dear Consumer,

I do apologize for the delay in receiving your loan agreement documents,for we were experiencing technical difficulties with our systems. With reference to our telephone conversation, please find the attached copy of the loan commitment reflecting the loan (company name) has approved for you.

Please review and sign the forms provided. Please fax back three pages requiring your signature and details of your banking information if you require a direct deposit. Also do not forget to fax your proof of identification and income. You can call me with any questions or concerns you may have. Many thanks and we look forward to helping you achieve your financial success!

---

Thank you for selecting (company name) to assist you in meeting your financial requirements. We are dedicated to help you find financial freedom to permit you to achieve your goals without the extra burden that comes along with high rate debt. We are proud of our broad client base which extends throughout North America, the Bahamas and Grand Cayman Islands and we are equipped with the necessary resources to attain one common objective... your Financial Freedom! We respect the privacy and integrity of the information you share with us. Our vision is to win customer loyalty through our service excellence.

No matter what your financial needs, we can accommodate you quickly and efficiently. We offer a unique array of products, services and support that is second to none in the financial industry. Among the services offered are loans (personal and business) as we realize that no matter how carefully you plan your budget, it may not always stretch as far as you need it to. Unexpected expenses and opportunities demand financial resources that are sometimes out of reach without financial assistance. Our expertise is to find the right loan structure to fit your needs and circumstances. How much should you borrow? What is the best way to borrow? We welcome your questions and will work with you to find the right financial solution for you and your family.

Once again, thank you for your business. We are here to answer any questions or concerns you may have.

While this letter may seem very professional, it is meant to smooth away any suspicions the target of this scam may be feeling, part of the manipulation these predators practice so skillfully.

Next, the consumer is told that due to the amount of the loan or their questionable credit rating, a deposit is needed. This upfront payment is often explained away as a down payment, insurance premium, or processing fee and can range from several hundred dollars to several thousand. Generally, the scammers will then instruct the consumer to send the deposit through Western Union or Moneygram, and fax applications complete with personal and financial information to them, with the assurance that they will receive their loan very quickly after these steps are taken. Of course, the consumer receives nothing, while the scammer disappears with both the deposit and all the information needed for identity theft.

Some of these fraudulent advance fee loan companies will make repeated demands for money from their victims, convincing them that upon looking up a current credit report, their ratings require a larger deposit than was first quoted. Another common excuse is that the original lender has backed out, but for a larger fee, they can secure another loan for the consumer. With these tactics and others, scammers have often convinced consumers to send substantial sums of money three or four times before they realize they have been victimized.

Usually, by the time the consumer has given up on receiving the funds they expected, coming to the realization they have been scammed, the perpetrators have disappeared. The toll free numbers provided are disconnected or are answered by a recording or machine, the operation probably moved to a new location to stay one step ahead of the law and groom a new batch of potential victims.

No legitimate company will ask for funds in advance of a loan, nor will it ask for any fee to be wired to them directly by Western Union, Moneygram, or any other wire service. Fees incurred in a legitimate loan generally are deducted before the funds are dispersed. These requests should be a clear warning to the consumer, as should any loan company that is pressing you for an instant decision on their offer.

What to Do if You Have Fallen Prey to Advance Fee Loan Fraud

Reporting this crime is essential. Many are ashamed to admit that they have been conned by such schemes, failing to report the fraud due to embarrassment. Those that do not make these crimes known leave the door open for these predators to strike again. While reporting such crimes does not always assure that the scam artist is caught, it does raise awareness of these schemes, shrinking their pool of potential victims. Filing a complaint with the Federal Trade Commission can be done online in approximately ten minutes. This small investment of your time can help towards shutting these operations down before they victimize scores of other unsuspecting consumers.

If these criminals have collected your personal identifying information, identity theft is a serious risk. With access to information from your social security card, driver’s license, pay stubs, and bank statements, stealing your identity will be quite easy, allowing these scammers to use your credit for their own purposes. Thousands in debt could be run up in your name in a very short period. Checking your credit report every three months to monitor for fraudulent activity is a good idea under such circumstances. If there is a problem, file formal disputes with each credit bureau. Our identity theft recovery page can offer more helpful information on the steps to take if your identity has been stolen.

Links to the Credit Bureaus

 

Other Helpful External Resources:

 

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