Advance Fee Loan Fraud Brokers Scam - Fraudulent Business Lending Scams
Advance fee loans are usually, if not always, empty promises of a personal or business loan requiring payment of a fee in advance.
Fraudulent advance fee loan schemes generally prey on vulnerable consumers — the unemployed, those who have bad credit ratings, or those in immediate need of money for emergencies.
Ads promising "money to loan . . . regardless of credit history" lure consumers into paying fees that range from $25 to several hundred dollars, in advance of supposedly receiving loans that are "guaranteed." Often, these ads feature "900" numbers, which result in charges on your phone bill, or toll-free out-of-state or country "800" numbers.
The fee may be called "processing", "application" or "first months payment".
While legitimate lenders may require you to pay application, appraisal, or credit report fees, these fees are never required before the lender is identified and the application is completed.
In addition, the fees are generally made payable to the lender, not the broker or arranger of the supposed "guaranteed" loan or extension of credit.
In most instances, you never receive the promised loan and either never hear from the loan company again or are later told by "turn down room" — a third-party that denies applications for loans and other credit — that you are ineligible for the credit.
Small businesses have been charged as much as several thousand dollars as an advance fee for a larger loan.
Whether you are an individual or the owner of a small business, the result is the same: you don't get your money; the con artist does.
In the U.S. it's against the law to ask for money up front to help obtain a loan.
The money must be in your hands for seven days before payment can be requested. This is the same for either a direct loan or through a third party.
Get loan offers in writing, shop around, then compare promises to the written agreement.
There is free or low cost help with your credit available at U.S. Consumer Credit Counseling Service at 1-800-388-2227.
Larger Business Loan Frauds
It is, however, not always the underprivileged that are targeted.
Recent cases have shown where businessmen seeking multi-million dollar loans for ventures, which have been rejected by more conventional lenders, have lost hundreds of thousands of dollars each ( $250-750k ) in advance fee losses.
Drawn in by the impressive executive offices and apparently affluent connections of high flying brokers, these entrepreneurs, upon paying, were soon faced with delays, evasions and excuses. This ultimately led to the disappearance of the perpetrators along with the funds collected.
Occasionally a ponzi structure needs to be established to work this scam, but fabricated word-of-mouth success stories will usually do the trick.
The Money Is On The Way
Desperately in need of cash you respond to one of several ads you've seen in the classified advertising sections of tabloids such as Star, Enquirer and Globe magazines and local newspapers.
LICENSED LOAN BROKER
Fast Cash. Easy qualifying loans from $1,000-$25,000.
Bad credit / no credit OK.
Call (800) 771-9322
Thousands of callers nationwide who responded to the ad's 1-800 number were asked for personal and financial information, told they could borrow up to 20% of their incomes and were instructed to call back in 45 minutes to see if they had qualified for a loan.
After calling you end up talking to a loan dealer who asks for more of your credit history information over the phone, then tells you that your loan application has been "approved", that you have "qualified" for the loan, or that your bad credit is not a problem and that there is a high likelihood that the lenders will be successful in obtaining a loan for you.
He requires you to submit certain identification and credit-related information in writing, along with an advance "processing" fee of $199, paid by money order or cashier's check, delivered to the loan dealer's address by an overnight courier service.
Once the money is received, he tells you that your file has been forwarded to the actual lending organization.
They subsequently notify you by mail that your loan application has been officially referred on and thank you for your business.
They provide the "lender" with your name and address, along with payment for the "turndown" service.
The supposed lender in turn requests from you another $15 to obtain your credit report plus another "processing" fee of $89.
Subsequently, upon payment of these fees, they send you a notice stating that an unidentified "private lender" has denied your loan request.
The "lenders" were actually "rejection mills" or independent fraudulent entities that, for a set fee paid by the fraudulent telemarketers, pretend to be lenders by sending forms and letters to loan applicants.
Unaware of this, you advise them about the loan dealers' practice of guaranteeing loans and requiring an up-front fee, yet they continue to decline your application which they never had any intention of fulfilling. None of the more than 5,000 loan applicants who sent advance fees received the loans.
Offering personal loans of up to $10,000 to persons with prior credit problems, one telemarketing scheme defrauded more than 5,000 victims and netted more than $1.1 million in just nine months.
Indicative of their target market, one disabled senior used her Social Security disability income, one woman used her child support money and one man pawned his television to pay the advance fee.
Some operations may initially send a fax implying approval so you send the requested advance fee.
This is later claimed to be a membership fee for a debt consolidation advice service. Then you are either ignored or hit with further barriers or payment requests prior to the non-existent loan "approval".
"I mentioned to my people the discussion we had and they need another $500."
"If I could just borrow $300 for a few days, I'm sure I could convince my superior to get you approved."
Promises invariably degenerate into lame excuses such as boiler room callers crying over the phone "I'm sorry, I lost your money".
For desperate, vulnerable people already in a state of torment such as needing "last resort" money to save the family farm, to pay for a loved ones funeral, or to cover needed medical treatment for a sick child, they offer to expedite the non-existent funds for an additional $200.
In Canada this crime is perceived as a consumer dispute issue so the criminals usually get probation or an average of 60 days in jail, if caught and convicted, versus the 15 years of prison given in states like Texas.
God Sent Us
The Church of God-Houston targets towns where workers have been laid off in major plant closures by offering interest free loans with no credit checks. As they condemn the sinfulness of bankers, these missionary-style visitors promise loans for cars, homes and unsecured credit.
"Just put down $300 for "character insurance" and you can get up to a $105,000 line of credit.
In this "take the money and run" scam, over 12,000 already burdened families in thirty states were taken in, while the cons continue to move on to the next needy area.
We'll Console You At A Later Date
One Florida-based company placed ads with a toll-free number in various publications throughout the country, promoting "debt consolidation".
When you call they state:
|they are offering a debt consolidation loan;|
|the loan will have a low interest rate, such as 3%; and|
|in order to receive the loan, you are required to pay a fee of $295.|
During the telephone call, they take an "application" consisting of personal information about you such as your Social Security number, income, employment and debt, and then provide a document to you with the total amount of the debt consolidation for which you are approved and the terms for repaying the loan, including the amount of the payments and the number of payments.
You are instructed to make payment of the initial fee by money order or cashier's check. They state that there will be no additional cost.
After having paid the initial fee, you do not receive a debt consolidation loan or any other kind of loan from them; instead, they offer you a bill-paying service, but only after imposing additional, previously undisclosed fees.
They Pick the Tree Bare
Many credit-granting companies offer consumer loans conditional upon the person taking credit-life, credit-disability, accidental death and dismemberment insurance and auto club memberships. Customers often don't even know the additional charges will be added to their financing debt and after applying for new loans end up with overlapping club memberships they won't use when needed simply because they don't realize they have the coverage.
Lend Me a Company Name
10/00 - An advance fee loan company boiler room operating in the Toronto area victimizing Americans has been busted after complaints were received by agencies such as the Ontario Ministry of Consumer and Commercial Relations and the OPP Phonebusters hotline.
It is alleged the loan company, operating as SIGNET, Universal and Viking Financial Group, in Panama City Beach, Florida, placed ads in the U.S. offering the opportunity to obtain a loan to consolidate debts. Exclusively targeted U.S. consumers were given a toll free number to call to start the application process.
The toll free numbers were registered to a different company name in the Toronto area.
Victims were told they were approved for loans but had to first send money by courier to the Panama City Beach, Florida, address but that mail was then forwarded to a Canadian address on a weekly basis.
The many other companies operated by the accused to fraudulently obtain funds are; Universal, Universal Finance, Avco Shoreline Viking Financial Group, Camerica Insurance, Prism Insurance, Signet, Nationwide and Telecom Plus.
Arrested and charged with Fraud Over $5,000 is Bennie Saunders, 28 who is currently before the courts on similar charges of operating a fraudulent telemarketing company in 1999.
Statewide Financial, a legitimate Michigan concern, reports that its company's name is being used in as a front for a loan scam.
Using the holding company name Lafayette Lending Group, telemarketers explain to prospective borrowers who answer their newspaper ad that their subsidiary -- Statewide Financial -- handles the brokering of loans.
Even if the customer does due diligence, all seems in order.
The customer is later advised that the loan is approved pending receipt of a 1% fee that should go via Western Union to the operation in Toronto. No loans are forthcoming. State+Union is another company offering such non-existent loans.
I am a victim of THE BUSINESS SOLUTION and am looking for justice.
I paid money to them up front and after a year of broken promises they eventually disappeared.
The contact Randall Morse kept either referring me to someone else or intimating they were very close to getting my funds.
Although I'll never get my money back I'd like to see these scammers behind bars.
Luis Escobar 06/05/02
The newspaper ad for a Florida-based loan company promised a helping hand, but Kenny Pohlman says the company instead helped itself to $950 from his wallet.
It turns out the company -- First Choice Credit Service of Stuart, Fla. -- may be bogus and Pohlman, who lives in Jackson, fears he'll never see the money that he paid as "insurance" on a high-risk loan he was applying for to buy a new car.
"It seemed legit," said Pohlman, 43, who said he has poor credit. "It was an ad in the newspaper.
When I called the number, they were very business-like, and the forms looked official. I had no reason to think they were anything but for real. I guess I was just plain stupid."
Pohlman filed a complaint with the Florida Attorney General's office and plans to do the same thing with the Missouri Attorney General's office.
Meanwhile, the Southeast Missourian says it is changing its advertising policies to ensure something like this doesn't happen again.
The paper ran the ad after someone called, claiming to be with First Choice Credit Service, and gave a credit card number to pay for the ad.
Donna Denson, the retail ad manager for the newspaper, said checking every ad is impossible, but the owner of this company was called back on several occasions and confirmed the ad.
The paper will make it a policy that all new out-of-state advertisers using credit cards must sign consent forms and fax a copy of their driver's license.
The paper has done this for classified ads for years, but the rule will now apply to all out-of-state ads.
"It's an unfortunate situation," Denson said. "But we're putting some policies in place to better protect our customers."
The paper also could lose the $1,081.92 billed to the credit card number it was given.
The person who owns the card is now questioning the purchase, and the credit-card company may end up refusing payment, according to the newspaper's advertising department.
After continually being denied credit, Pohlman noticed the advertisement in the Southeast Missourian on Sept. 4.
He wanted to buy a car, so he called the number and was told he was a good candidate for a $6,900 loan.
But there was a catch: He'd either need a co-signer of they'd need $950 sent to them to "insure" the loan, Pohlman said.
"It seemed like a good idea," he said. "I thought if I broke my leg or something, it would be paid for. But I got screwed."
After Pohlman sent the money via Western Union, the loan wasn't deposited into his checking account as he was told it would be.
When he called the number, he was given the runaround. Then, a few days later, the number stopped working altogether.
A report on file with the Better Business Bureau of Southeast Florida says the company is using the address of a newspaper, the Stuart News.
The bureau, however, contacted that newspaper, which denied that the business is being operated from their offices.
An advertising representative with the Stuart News says a database listing all of its clients does not show that a similar advertisement was run in their newspaper.
First Choice Credit Service has never been a client of theirs, she said.
The Better Business Bureau also confirmed that the company isn't licensed locally or with the state of Florida and had declined to give an address to the bureau. The principal owner is listed as Robert Duvell.
Pohlman has contacted the Florida Attorney General's office, which is looking into the matter.
The phone number listed in the advertisement, which ran in the Southeast Missourian Aug. 14 until Sept. 4, no longer works.
But the company actually may be based in Canada. Pohlman said he sent the money to Canada.
A woman calling herself Crystal Waters told him that's where the loan insurance company was.
But Scott Holste, a spokesman for the Missouri Attorney General's office, said they fielded another complaint two weeks ago about First Choice Credit Service.
A woman said she got a letter from that company and was told that she had been guaranteed a $5,000 loan if she sent $600 to an address in Canada.
"Wherever the money goes is where they are," Holste said. "They could have a phone number and a drop box in Florida, but it's all run from Canada."
Holste said that for some reason Canada provides a haven for businesses like these and a majority of their complaints stem from there.
These sorts of schemes are called "advance fee loan scams," Holste said.
They prey on people desperate for a loan who otherwise couldn't get one. They require payment up front, Holste said.
"These people lose hundreds of dollars or more, and they're always the ones who can least afford it," Holste said. "We tell people to look out for these scams that require money up front. They're almost never legitimate."
Holste said they'll be investigating the complaints and trying to track down the business.
But it's hard to be optimistic, he said, because these companies constantly change the names of their businesses and even use fake personal names. "We'll do what we can, but it's usually easier to warn people," he said.
Within the past year, Holste said, they have received more than 3,200 complaints about credit-repair or advance fee loan scams.
"People are vulnerable," he said. "Especially with the economy being in a slump. More people are looking at ways to borrow money."
Pohlman said that he doesn't hold out much hope for getting his money back. He said that he is going to try, though.
He also said that he hopes that telling his story will provide a good example to others.
"Before all this, I never thought I was senile," he said. "Now I'm beginning to wonder."
by Scott Moyers ~ Southeast Missourian 10/01/02
Normally Smart Cons Stupid to Involve Real Companies
02/03 - In Arizona, a company was advertising consumer loans, debt-consolidation loans and home loans under a name "Golden One International."
Then the real Golden 1 Credit Union in California eventually got calls from collection agents trying to collect bills run up by Golden One International.
They found out the hard way about a new wrinkle in identity theft, in which highly mobile criminals bilk consumers by using technology and stolen credit cards to impersonate banks and credit unions.
Bunko Canadian call centers, posing as financial institutions, dupe customers into providing account numbers, Social Security numbers and other sensitive data while they think they're applying for loans.
When no loans materialize, the customers often complain to the real bank or credit union that the thieves mimicked.
CitiGroup, the largest bank holding company in the country, has also had its identity abused by criminals who placed ads locally for a fake company bearing their name.
Two such classified ads appeared in this newspaper, paid for with a bad credit card, and several others were caught before they ran.
The scam works like this: A dummy organization advertises using a name similar to a well-known bank, credit union or mortgage company and lists a phone number.
The ads make big promises, offering money for people with no credit, bad credit or bankruptcy.
When would-be customers call and leave a message, they get a return call from a representative happy to make any loan or debt consolidation.
The consumer is asked to send a check for application, appraisal or insurance fees. The victim also gives out all the private information necessary for a credit application.
They never see the loan, they never hear back from the company, and there's a good chance their credit card numbers will be used to further the scam.
When outraged consumers call to complain to the company they thought they were dealing with, they learn that they've just been added to the ranks of victims.
The trail is hard to find. The toll-free telephone numbers go out of the country.
The credit card numbers used to place the ads are stolen, as are the credit cards used to buy the cell phones and satellite phones. A whole operation can be run from one room one day and a different one the next.
"We've taken down major operations, and they just spring up again," said detective Staff Sgt. Barry Elliott of the Ontario Provincial Police in Toronto. "This is very serious stuff.
In the Toronto area, at any given time, we probably have 200 rooms working.
In all of Canada, it's 500 to 1,000 rooms. That means there are 5,000 to 10,000 criminals calling out every day.
It is astronomical how much money they are bringing in with this."
A Canadian task force set up to combat the scams lists at least a quarter-million dollars in reported U.S. losses from about 30 cases through last August, and U.S. activity by the groups has stepped up since then.
That figure doesn't include the lost time and reputation of businesses that unwillingly become false fronts for the scam.
The operations are sophisticated and highly mobile. They use wireless satellite phones and laptop computers, and have the money sent to Western Union in Canada.
When an operation is caught and shut down in Canada, the perpetrators get two years of probation for a first offense, and perhaps a few days of jail for a second offense, Elliott said.
"The Canadian justice system is just not scaring them away."
There have been cases where suspects extradited to the United States were found guilty and sentenced to long prison terms.
"You'd have to kill four or five people (in Canada) to get that kind of time up here," he said.
In some cases, the criminals add insult to injury. In a recovery scam working now, callers who claim to be attorneys are contacting people who have been swindled and asking if they want to be part of a large class-action lawsuit. They ask for a reservation fee to be included in the case, then disappear.
Cons Without a Heart Finally Landed
Jun 21, 2004 -- A probe has unraveled a 10-year organized crime ring that allegedly scammed people in Virginia and 22 other states out of millions of dollars in phony credit union loan deals.
Leslie Card, 35, and Kevin Card, 33, both Jamaican nationals, were arrested in Ontario earlier this month.
The two men have been charged with 22 felonies, including defrauding the public in conjunction with operation of the so-called “America’s Choice” and “Heartland” credit unions.
Canadian authorities estimated the scam was averaging $10,000 per day. Investigators also found guns and drugs during a search of the phony business’ Ontario office.
They would purchase a series of prepaid 866 toll-free numbers up in Canada, which you can buy off the shelves.
They would then order up ads in medium- and small-sized newspapers in 23 states, that were usually two columns wide and five inches deep, saying if you have bad credit or have been through bankruptcy we can help and give you a consolidation loan immediately.
People would respond to that, not knowing they were calling Canada.
The phony company would give fictitious addresses in upstate New York and would ask that callers apply for their loans.
People would send their personal information on the applications, which led to identity theft. In about six to eight hours, those who filled out an application would get a call from a fake company using the name of a legitimate credit union called “Heartland Credit Union,” informing the person that their loan could not be accepted because their credit was so poor.
However, the fake company would then tell the person that there is one company that can supply the money, but the person would need to Western Union at least $1,000 or more in origination fees, plus five months of advance payments. The largest sum taken was $15,500 from a church janitor in southern Virginia.
That would be the last you heard of Heartland Credit Union.
Victims eventually contacted legitimate credit unions asking about the company and were told that federal investigators had deemed the company was phony.
Canadian Loans Yield British Groans
01/05 - (Daily Mail) BRITISH consumers are being tricked out of thousands of pounds by professional criminals operating a new scam from Canada.
The Office of Fair trading today warned people to be wary of advertisements that have appeared in local newspapers offering fast loans regardless of credit history.
The adverts, which have a freephone number to call, are usually placed in the classified sections of free or local newspapers.
Consumers who respond are told their loan has been agreed but before they can have the money they must pay a fee to cover insurance on the loan.
They are asked to pay this fee by money order via Western Union or Money Gram. Once the fee is paid the consumer never hears from the company again and the loan is never received.
The OFT says some victims who have lost as much as £4,000.
The OFT is working with the authorities in Canada to take action against these fraudsters and is urging consumers who have been contacted in this scam to report it to the OFT by calling 08457 22 44 99 or by emailing [email protected] The OFT is also concerned that organised criminal gangs may be using the personal details collected from victims of this scam to commit further fraud.
John Vickers, OFT Chairman, said: 'Any newspapers who are approached to put adverts of this sort in their papers should immediately contact the OFT and give details of who contacted them and the advert they attempted to place.'
How to avoid small business loan scams.
Advance Fee Loan Scam - article
Beware of Loan Scam Artists Asking for Payment Up Front - loan company info.
Canadian Business Identity Theft Debt Consolidation Offer Scam - article was at