Stingy credit markets have opened the door for advance-fee loan scammers who prey on potential borrowers shut out of traditional markets by tighter lending standards.
With banks getting stingier with credit, scammers offering so-called advance-fee loans are having a field day, with complaints to the Better Business Bureau about such loans up 21% in 2008 over the previous year. Since victims may not know where to file a complaint or may not want to admit that they’ve been scammed, BBB officials say that figure is probably just a fraction of the total.
Advance-fee loans can be tempting to potential borrowers who have been shut out of the usual credit markets because of tighter lending standards. Hawking loans with low rates that don’t require a credit check, the crooks ask only that the borrower wire them a couple of mortgage payments or an insurance fee in advance. Once the money is wired, say law enforcement officials, it’s gone and there is virtually no way to get it back.
In today’s tight-credit environment, a borrower should be leery of any lender that doesn’t do a credit check, say consumer advocates. Asking for up-front money is another red flag, along with any request that the cash be wired. Legitimate lenders won’t ask you to wire money; scammers generally have to because most of them are based in Canada. Also, don’t fall for a company name that sounds familiar or a Web site that looks like the real thing, which is another favorite tactic of the crooks. You can check out a site’s registration date at whois.net (www.whois.net). If the site has been registered recently, chances are it’s a fake.