Concept of down payment against shopping for merchandise on credit, like car loan, mortgage and other household or business products, equipment, furniture and utility could be easily absorb as a logical transaction by our mind because it reduces our monthly payments to the level of our affordability, but paying cash for the sake of getting cash seems really illogical, reducing the value of dollar beside increasing personal liability.
Don’t pay upfront fee, legitimate lenders don’t usually ask for a fees upfront. If there is any processing charges, credit reports expenses, interest rate lock fee, application fee or appraisal fee requires once you begin working with a loan officer, it should be very small and not the hundreds or even thousands of dollars that scam artists usually demand. Moreover, this scam differs because it requires advance payment for the promise of a loan – an illegal act, both in USA and Canada. Many advance-fee loans are solicited via the unsolicited mailings, telephone calls, internet, promotional literature or advertised in the classified sections of the local newspapers and magazines.
Canadian loan scams:
Advance fee loan scams are the second highest reported frauds to the Royal Canadian Mounted Police (RCMP).
Possibility:
- Total loss – Once you send the money it is very difficult to get it back.
- Partly loss – The upfront or arrangement fee is never returned and even if the loan does arrive, it is less than the agreed amount, with a high rate of interest.
Who is at risk?
Advance fee loans often take advantage of the most vulnerable members of our society. These shady loan companies target borrowers who have credit problems and can’t get loans from regular sources of traditional financial institutions, often people with a poor credit rating, little financial experience with low-income group get caught under false promises. These people may be financially tight enough even they can’t afford to lose the arrangement fee.
How it works?
Regardless of your income, job status or past credit history, you’re promised a loan or credit card in exchange of an upfront fee that you have to pay before receiving the money or credit card. Don’t fall for such promises that you’ll get a loan regardless of your credit problems. If you have poor credit or haven’t established a good credit record yet, it’s unlikely that anyone will lend you money. Your credit history along with your monthly income to check your savings and affordability to pay back loan are the basic things that lenders use to decide if you are of a good credit risk. The loan or credit card never materializes, and your fee is lost.
Signs of advance fee loan fraud:
Beware of companies who offer to arrange personal loans, mortgage loans, debt consolidation or credit cards but request an upfront fee.
- It’s a warning sign if a lender says they won’t check your credit history, beside asks you to disclose your personal information, such as your bank account number, driver’s license or Social Security / Social Insurance number. Its possible they may use your information to debit your bank account to pay a fee they’re asking undercover.
- If you are offered a low-interest loan against your money problems and bad credit history. Be careful because in most such cases there is no loan and this is just a front for scammers looking to make quick money.
- If you do not have the offer in hand or confirmed in writing and you are asked to pay upfront, do not do it. It is fraud and it is against the law. Moreover, it may also be possible that loan advertisements you have attracted to don’t mention any arrangement fee but suddenly request a fee on your loan application; be very wary.
- Be cautious about emails offering to help you get a loan. Most of the unsolicited emails are fraudulent.
- A loan that is offered by phone, it’s illegal for companies doing business by phone to promise you a loan and ask you to pay for it before they deliver the money.
- A lender who asks you to wire money or pay an individual via Western Union or MoneyGram. Don’t make a payment for a loan or send money orders for a loan or credit card directly to an individual; legitimate lenders don’t ask anyone to do that.
- Pressure to act immediately. Advance fee loan schemers will try to get you to send money or give out personal information like your credit card number, bank account information and social insurance number before you get any paperwork. Insist on receiving the necessary paperwork before deciding whether to apply for credit.
- A lender who uses a copy-cat or pretended to be well-known or established name. Crooks often use like they been a respectable organization and uses a websites to get attention. These kinds of scam artists also uses some authority names like Better Business Bureau, VeriSign Secured, and other like they been fulfilling industry standards, and some even produce forged paperwork or pay people to pretend to be references.
- Always check location and contact information. If the loan broker hesitates to tell you their physical location, beware that this is a common ploy to avoid law enforcement detection. Always get a company’s phone number first for instant check. Get a physical address; if its not available through their phone number, otherwise a company that advertises a P.O. Box as its address is one to check out with the appropriate authorities like BBB, which is available throughout the U.S. and Canada. Then contact the BBB in that city to request information on the lender. Don’t do any business with the broker and the financial institute until you have their physical address or location
- A lender who is not registered in your province, state or country. Lenders and loan brokers are required to register in the area where they do business. Although checking registration doesn’t guarantee that you will get the lender with the best offer but it will save you to get caught by any crook.
What to do:
Ignore the request for upfront payment for the promise or “guarantee” of a loan. Never ever send money to people you do not know via Western Union or MoneyGram, it is always a guaranteed fraud. Don’t pay upfront fees to anyone. The reports of unsuspecting homeowners placing their trust in the hands of third party’s with no results are mounting. Many have lost thousands of dollars and the result is often foreclosure. If anyone other than an attorney or banker asks for a retainer or upfront fee – you should stop your self to proceed.
Whom to report it to:
If you have ever fallen prey to advance fee loan fraud, you should report this crime at once because your hesitation will not remove traces of hard feelings that you have been conned by such schemes but you will feel strong and responsible while closing the door for these predators to strike again to others.
- File a complaint with the Reporting Economic Crime Online (RECOL) through its website here at www.recol.ca. This service is administered by National White Collar Crime Centre of Canada and is supported by the Royal Canadian Mounted Police and other participating agencies.
- You can file your phone scam reports with the PhoneBusters (The Canadian Anti-Fraud Call Centre) 1-888-495-8501 (Toll Free) or send your email at info@phonebusters.com or Website: www.phonebusters.com
- Or contact the Competition Bureau Canada, Phone: 1-800-348-5358, Website: www.cb-bc.gc.ca and Email: compbureau@cb-bc.gc.ca
- It is also recommended that reports be also filed in the US with FBI www.ic3.gov/default.aspx and with the Federal Trade Commission (FTC), or call toll-free, 1-877-FTC-HELP (1-877-382-4357) or Website: www.ftc.gov 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.
Scam Origin:
If you surf online, you will find two same kind of views, like American websites or blogs mostly says fraud happened from Canada and Canadian says its been happened from American jurisdictions, although both are at the same risk of such loan fraud that can happen from their inside and outside both. What is the right answer? The most logical thing is this, fraud artists don’t have any country because these people don’t have any respect for their government laws as well as social values. Along with the emotional statement there is also other solid fact, which is making it difficult to determine where is the culprit. Advancement of our telecommunication through the satellite usage if helps us to carry our phone number to be used through out the world then it also has made any one guessing hard about the physical location of the scammer working its money snatching game, beside you can also receive calls through internet without highlighting any number in your CLI screen of your telephone set. Cross-border scams seem to be a growth industry; thousands of people are losing money every day by these international crooks and these scam artists operating their illegal act beyond the boundaries of the victim’s area make them advantage to an easy escape from the legal jurisdiction and also reduce the chances of money recovery. Although, there have been strongly working joint programs by these North American agencies to resolve this Cross-border fraud happening but it will not solve without the help of the consumers who are paying money to a person they even don’t know. It will definitely deliver more positive results and make it more efficient if the number of such fraud cases reduced and its only possible if most of the consumers understand that its against the law to promise or guarantee any loan which carry an advance fee.
Who is responsible?
Ignorance of law has no excuse! If it’s an illegal act to demand an upfront fee on cash advancing then paying make you responsible also. You need to ask yourself, why is this company, which I have never heard of, and which does not know me, willing to give me a loan? We have entered in to a great time when we no longer require any membership to get into a physical library to go and get the information or consult a professional about the knowledge we are looking for, this all require plenty of time and expenses to reach our goal. This internet provides instant solution to our everyday life’s issues and problems, if the topic you are looking for is not listed you can even make a question to get your answers. From more than a decay now it have been written online on this cash scam topic by the government and the private sector both with repeated same title as “Don’t Pay An Up-Front Fee” (search result found with Google which have reached to 72 million and Yahoo 27.4 million today), online scams awareness has been providing using various different platforms that alert the public to deceptive and fraudulent mass-marketed scams, but don’t know why consumers are not taking it seriously and loosing their hard earned money, there have been continue flow of such scam reports even daily with increasing numbers of people falling victim to a scam involving paying money upfront to unscrupulous loan companies for a loan that rarely materializes. Whose fault is this? In fact responsibility goes to the scam artists and they should get caught for the legal actions and punishment but as a consumer you are equally responsible for the loss because you are paying money to a person without any legal documents and practice. Believe me scam artists are not changing their way of making fraud but they are continue working on the same old fashioned trick of making fraud that playing with the emotions, weakness, emergencies and difficult financial situations as giving you hopes to offer a solution to the money troubles, when other doors seem to be close, although the hope you will be given is false but money they are asking you to pay is real.