Advance Fee credit schemes steal from people who are already in financial trouble

A Florida scam artist has been caught after ripping off thousands of people in what is known as an advance fee credit scheme. The scam -- which targets a market segment known as the under banked -- offers credit to people, who wouldn't qualify for it, otherwise.

Although variations of advance fee schemes have been around for centuries, the global and anonymous nature of the Internet has enabled them to spread like a virus with the click of a mouse.

In advance fee credit schemes, after paying a large fee in advance, the people don’t get the credit and are out the fee.

According to the AP, the Florida man, defrauded low income people out of about $12 million in this recent arrest.

Although in this instance, credit cards were being offered, other forms of credit are offered in advance fee credit scams, also.

These scams are spread via spam e-mails all the time, but they also appear in more traditional advertising like newspapers and magazines. People are also often solicited by telephone.

Recently, the Truston blog commented about a New York Times story revealing that InfoUSA, a databroker, was selling lists of senior citizens interested in lotteries and sweepstakes. Lottery and sweepstake scams are rampant on the Internet.

I wonder how many other telephone lists are sold by data brokers, which help fraudsters market their scams?

The Federal Trade Commission (FTC) has a nice page explaining this problem, here.

Suspected activity can also be reported to the FTC:

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit http://www.ftc.gov/ or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Most scams do not make sense and are too good to be true. Paying a third-party to get credit is unlikely to change, whether or not, an individual qualifies for a particular financial product.

On a final note, it's also not wise to give out your information to someone you don't really know. Doing so, might lead to becoming an identity theft statistic.

AP story, here.

Truston blog post on New York Times article about data brokers selling telephone lists to criminals so they can "market" their scams, here.