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Scam Alert

Fake loan ads scam consumers

Looking for a loan? The official-looking newspaper advertisement you answer could drain your bank account.

The Federal Deposit Insurance Corporation recently released a warning to consumers about bogus ads placed in small or community newspapers.

"On face value, you would not know there was anything out of the ordinary," says FDIC spokesman David Barr.

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The bogus ads offer mortgage, small business, debt or consolidation loans. The ads look real because they use the logos of real banks -- but with different contact information. The contact numbers in the ads have been traced to prepaid cell phones.

Potential victims who apply for these bogus loans are asked to provide their Social Security number and are then told their loan has been granted. The scammers fax the victim a loan application, requesting bank account information and sometimes a copy of the applicant's driver's license and Social Security card. The scammer then asks for an advance payment through a Western Union wire transfer. Only when the fake loan never appears does the victim realize what has happened -- he's wired cash to a thief and his identity has been stolen.

Most victims lost $500 to $800 dollars each," says Barr. But, another danger is the possibility for identity theft which could lead to a much greater loss, he says.

The FDIC warns that you should be suspicious of any bank that requests you to wire money outside of the banking system or to what the scammers are calling a "third-party consultant."

"Banks tend to offer consumer loans directly. If you are asked to wire money outside of the bank or outside of the country, that should raise some red flags," says Barr.

Consumers should also be suspicious if the phone numbers in the ads are answered on a cell phone. "If you think there's anything out of the ordinary, do some of your own research," says Barr.

The FDIC advises consumers to look up the bank's contact information themselves, rather than calling the number in the ad. The FDIC has a database of most banks on their Web site.

If you think you may be a victim of this scam, you should file a complaint with the Federal Trade Commission and contact one of the credit bureaus to request a fraud alert be placed on your credit report.

According to the FDIC, the scammers are communicating with the newspapers through prepaid cell phones purchased in Canada. This scam sounds remarkably similar to another advance loan scam being run out of Canada.

Read about more scams.

 
-- Posted: Oct. 10, 2003
   

 

 
 
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