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Advance Fee Scams / Loan Scams

According to the Council of Better Business Bureaus, advance fee (up-front fee) loan scams are victimizing consumers across the USA and Canada. These scam artists are preying on unwary consumers, taking their money for the promise of a loan or credit. The scam artists often impersonate legitimate lenders to entice consumers into falling for their bogus offer.

Many advance fee loans are promoted in the classified sections of daily and weekly newspapers and magazines. Often, the ads feature toll-free 800, 866, or 877 numbers, or area codes from Canada, such as 416, 647, 905, or 705. The loans also are promoted through direct mail, radio, and cable TV spots. The fact that an ad is in a legitimate media outlet — like the local newspaper or radio station — doesn’t guarantee that the company placing it is trustworthy.

Consumers who respond to phone calls or ads that purportedly guarantee loans to those with poor credit instead lose hundreds of dollars or more in fees demanded by the suspected scammers.  The frauds follow a typical pattern. Consumers call a toll-free number and are told to submit credit information over the phone or fill out paperwork to be mailed later. In exchange for a $5,000 to $100,000 loan, they are told to wire or mail a money order for $500 or more to pay processing fees or other charges.  The applicants never get the loan, and they lose what they paid in fees. They also risk having their identity stolen if they provided a Social Security number or other personal data to the scammers.

Legitimate offers of credit do not require an up-front payment. Although legitimate lenders may charge application, appraisal, or credit report fees, the fees generally are taken from the amount borrowed. And the fees usually are paid to the lender or broker after the loan is approved. Legitimate lenders may guarantee firm offers of credit to “credit-worthy” consumers, but first, they evaluate the consumer’s creditworthiness and confirm the information in the application.

Remember….If it sounds too good to be true, it probably is. Follow legitimate business practices, know who you are dealing with, check with the Better Business Bureau, and be weary of businesses that operate out of post office boxes, mail drops or that don't have street addresses, or who are never "in" when you call, but always call you later.

U.S. and Canadian law enforcers say consumers can avoid being taken by advance-fee loan sharks by taking the following precautions:

• Don’t pay for the promise of a loan. It’s illegal for companies doing business by phone in the U.S. to promise you a loan and ask you to pay for it before they deliver. Requiring advance fees for loans also is illegal in Canada.
• Ignore any ad — or hang up on any caller — that guarantees a loan in exchange for a fee in advance.
• Remember that legitimate lenders never guarantee or say that you will receive a loan before you apply, or before they have checked out your credit status or contacted your references, especially if you have bad credit or no credit record.
• Don’t give your credit card, bank account, or Social Security number on the telephone, by fax, or via the Internet unless you are familiar with the company and know why the information is necessary.
• Don’t make a payment to an individual for a loan; no legitimate lending organization would make such a request.
• Don’t wire money or send money orders for a loan through Western Union or similar companies. You have little recourse if there’s a problem with a wire transaction. Legitimate lenders don’t pressure you to wire funds.
• If you are not absolutely sure who you are dealing with, get the company’s number in the phone book or from directory assistance, and call it to make sure you’re dealing with the company you think you are. Some scam artists have pretended to be the Better Business Bureau or another legitimate organization.
• Check out questionable ads by calling Project Phonebusters in Canada toll-free at 1-888-495-8501. If you live in the U.S. and think you’ve been a victim of an advance-fee loan scam, report it to the FTC online at http://www.ftc.gov or by phone, toll-free, at 1-877-FTC-HELP (1-877-382-4357).

Nigerian Fraud (419) Schemes

Advanced fee scams were previously referred to as either 419 fraud or Nigerian fraud, both named after Section 419 of the Nigerian Penal Code. This fraud first originated out of Nigeria but is now rampant in many other countries. Potential victims of this fraud may receive correspondence related to estate monies, contest/lottery winnings, sale of goods, found monies, or employment opportunities. While the topics differ, they all work under the same premise to scam consumers out of their money. The originator of the document may offer to transfer a large sum of money into the victim's personal bank account, which would necessitate the victim providing the con artist with personal information such as: address, telephone number, bank account number, as well as copies of a passport and/or driver's license. Other schemes may include a counterfeit check along with the correspondence. 

You should take the following steps if you have received a solicitation but have NOT lost funds:

1. Do NOT respond to the message!
   
2. Forward the correspondence to your local USSS field office http://www.ustreas.gov/usss/field_offices.shtml.
   
3. Forward the scam e-mail to the 419 scammer's e-mail provider's abuse center to report the abuse. Most providers have specific abuse mailboxes set up to handle such problems. Some examples include: abuse@yahoo.com; uk-lmail-abuse@yahoo-inc.com; abuse@hotmail.com; etc.  Be sure to include the scammer's message with its headers. Alert the provider that the e-mail address is being used to solicit illegal activities.

If you have already lost funds in pursuit of the above described scheme, please follow these steps:

1. STOP corresponding with the scammers immediately!
   
2. United States citizens and residents should contact the nearest USSS Field Office http://www.secretservice.gov/field_offices.shtml by telephone to report their loss.
   
3. File a Financial Loss complaint form online with the Internet Crime Complaint Center http://www.ic3.gov, which is a partnership between the National White Collar Crime Center and the Federal Bureau of Investigation (FBI).