Consumer Alert: Loan Scams
April 12, 2010 - Please note: We will be updating this article in the next few weeks to include updated scams, tactics, and resources. Please bookmark this page and return soon.
The Federal Bureau of Investigations (FBI) has been publishing reports
revealing a rise of mortgage and loan frauds for several years now. Fraud
is a practice so common nowadays that the Federal Trade Commission (FTC)
is always updating the list of scams that everyday find new victims whether
online or via phone calls.
Since 2005, people trading
in their old cars, but owing money on them, are victimized by supposed
dealers offering to obtain a payment figure to pay off their loans
towards applying that money to a new car purchase. However, such "dealers" did
not pay and people suddenly found that they still owed the money and
the new car was just an illusion to take their money and run.
FTC also published a full report about advance-fee loan scams, which
is another popular model to rip-off people. Scammers that often impersonate
legitimate lenders that people can associate their names with legit
operations to perform this scam.
loans scams are promoted on the Internet, but also through newspapers
and magazines in the classified sections, as well as by direct
mail, phone calls, radio, and infomercials on cable TV, because
the media always states that they have no endorsement or guarantee
of the legitimacy of those offers. For more information, visit
the FTC website at http://www.consumer.ftc.gov/articles/0078-advance-fee-loans
Trade Commission recommends a simple formula to detect and avoid
this scam: if they ask you to pay up-front fees for helping your
credit, then it is more likely a fraud because legitimate offers
do not require such advance payment.
starting 2007, a woman in North Carolina sent to a "reputable" company
almost $3,000 to obtain a $20,000 loan. Stories like this usually
end up among the thousands of complaints that the Federal Trade
Commission, the National Association of Attorneys General,
the Federal Bureau of Investigations, and the Better Business
Bureau receive every year.
are aimed to create awareness among the general public because
they are hurting real estate professionals, lending institutions,
and ripping off thousands of victims nationwide.
are in the top of preferred victims, because any business
related with home or real estate properties involve significant
amounts of money, but the small borrower can also be fooled
by credit repair offers, or other misleading strategies
to drain his or her money.
comes to credit repair, the artist of scam will approach
the victim offering to erase his or her bad credit, clean
up a damaged credit history, or create a new credit identity
for the victim, a thing that is not possible.
September 2006, the Credit Repair Organization Act
was passed by Congress and now enforced by the Federal
Trade Commission and state attorneys general avoiding
legitimate lending companies from taking money from
consumers before any loan or credit services are fully