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Scam Alert

Beware the disappearing credit union
Is that really a credit union granting you a loan -- or are you about to send money to a con artist?

The Credit Union National Association (CUNA) says that companies posing as credit unions are placing advertisements in local newspapers inviting consumers to take out a loan. When a consumer sends the money, it disappears -- and so does the credit union.

Dan Mica, CUNA president and CEO has asked U.S. Attorney General John Ashcroft and the Federal Trade Commission to step in and help before the problem gets any worse.

"Over the last year, we have observed a growing number of instances in which advertisements have been run in newspapers for nonexistent 'credit unions,'" writes Mica in a letter to Ashcroft.

"These organizations appear to be trading on the trust earned by legitimate credit unions over many decades of service in the marketplace to encourage ordinary citizens to send funds, which then disappear."

Mica says these advertisements have been spotted in newspapers across the nation in states such as Alaska, California, Colorado, Indiana, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, Rhode Island, Utah, Wisconsin and Washington.

The Federal Deposit Insurance Corporation recently released a warning about a similar con -- ads for bogus bank loans, which were 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.

The ads look real because they use the logos of real banks -- but with different contact information. The numbers in these ads were traced to prepaid cell phones purchased in Canada.

Beware any request to "wire" funds
In an example provided by Mica, one of the credit union ads used the made-up name of First Rate Credit Union with the logo of the National Credit Union Administration. Consumers who called the number in the ad were told to wire $1,500 to an address in Canada through Western Union.

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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.

Aside from losing their money, consumers who provide the scammers with personal information, such as their Social Security number and bank account information, are at risk for identity theft.

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.

Here are more of the latest tricks scammers use to steal your cash and your identity:

-- Posted: Oct. 10, 2003


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