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Stop Loan Fraud

Credit.com is fighting advanced-fee loan fraud for National Consumer Protection Week 2009. This particularly noxious scam preys on people who are facing money or credit issues.

What is advanced-fee loan fraud?
With this scam, fake lenders offer a too-good-to-be-true loan to a desperate borrower. There are several ways that the scammer finds victims: newspaper ads, fake lending websites, telemarketing, spyware, etc. The "lender" emails official-looking loan documents and asks for an "insurance" payment, advance on payments or deposit.

Funds are wire transferred by the victim – usually to Canada – and the loan never appears. Victims are usually asked for $400-$1,800 with the initial transfer and are often asked for subsequent transfers, up to several thousand dollars. There is no way to recover the lost money after it has been sent to the scam lender.

How widespread is loan fraud?
In 2008, the BBB received 2,300 complaints from victims, a 21% increase from the year before. According to the National Consumers League Fraud Center, advanced fee loan scams increased to account for 3% of complaints in 2007, up from 1% in 2005. They estimate the average loss to be $1,310. (Source: Fraud.org)

With the credit crisis making legitimate loans harder to find, we have seen the volume of complaints to increase significantly. Credit.com receives several reports from victims and near victims of this scam each week.

What can be done to stop loan fraud?
Credit.com recommends that all loan fraud victims report their cases to the police, their state attorney general and the FTC. Reporting incident to these agencies doesn't usually result in direct action for the victim, but can help build awareness for the extent of these crimes.

In addition, we feel that public awareness is the most effective tool in stopping loan scams. Credit.com has been aggressively fighting loan fraud since July 2006 with "FairView Financial Services."

What has Credit.com done?
Our team of personal finance experts investigates reports of loan fraud and posts warnings to consumers online. As quick responders to these quickly moving con artists, our information about scams is often the first potential victims find online.

Read Credit.com reports about the following scammers: Brookfield Lending, Prudent Financial Services, Matrix Financial, Central Group Alliance, Stockwell Financial Services, Hampton Group Services, Metro Financial Inc, Affinity Financial Trust, American Reliance Financial and Triple Touch Financial. We have worked with victims who have lost between $600 and $4,500 to advanced-fee loan fraud.

Where can I get more information on loan scams?
The FTC has information about advanced fee loan fraud. The FDIC and Western Union also have information about the scam.

Credit.com has also dedicated a section of our community forum to helping loan scam victims share their stories and warn others.

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