Saturday, October 29, 2005

Advance Fee Loan Scams

I was reading "Ask the Private Investigator," which is a blog that is linked to mine and saw a post on Advance Fee Scams taking another "twist," or mutation. From there, I did a "news search" on Yahoo and found an article by Stephanie Zimmerman of the Chicago Sun Times dated October 24th on this very subject.

Ms. Zimmerman writes:

"The loan approvals seemed like the end to their troubles, but little did two suburban women know, they were about to get even deeper in debt.

Sadly, they were not alone: More than 4.5 million Americans were said to have lost money to advance-fee loan schemes last year in an old ripoff that's seen a resurgence in Chicago and nationally. So-called loan brokers -- often people based across the border in Canada -- tell consumers they have been approved for a loan, then ask them to pay a "security fee" to guarantee they will make their monthly payments.

Once the money is wired, the "loan" disappears.

"We are hearing on a daily basis from people who have lost money to advance fee loans," said Steve Bernas, vice president of the Better Business Bureau of Chicago and Northern Illinois."

Most of the solicitations (ads) target people, who have bad credit and promise loans even to those in bankruptcy. The ads are being found in "classified sections" and on the internet. The recently reported scams come out of Canada, which more and more, is becoming an origin point for advance fee activity.

The FTC also has some recommendations on what to look for:

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 or by phone, toll-free, at 1-877-FTC-HELP (1-877-382-4357).

Advance Fee Scams seem to mutate continuously. With ever growing numbers of people gaining access to the internet, there are a larger pool of victims to be harvested by the cybercriminals. Unfortunately, as this pool of victims grows, we are now seeing the less fortunate (people who already have financial problems) being taken advantage of.

You can read Stephanie Zimmerman's article at:

For the FTC publication on this matter, click on the title of this post.

1 comment:

Judge Roy Bean said...

Ted - you should visit with us in the forums at

There's a forum section on advance fee and debt elimination fraud.

The Honorable Judge Roy Bean