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Alert: Canadian-Based Loan Scams Are Blanketing The U.S.

Troy, MI (SafetyAlerts) - The Canadian Council of Better Business Bureaus (CCBBB) has reported that advance fee loan scams, originating in Canada, are once again being marketed to U.S. citizens. The CCBBB stated it is receiving more than 20 calls each week from upset citizens throughout the United States who have sent checks and money orders to Canada for loans between $5,000 and $25,000.

"Unfortunately, no loan money has or will be received by these people. These individuals not only lose the advance fee they submit (which can total several thousand dollars), but they are also being conned into providing considerable personal information on the promise that they will receive a loan," said Bob Whitelaw, president of the CCBBB. The Canadian Council is the umbrella organization for the 15 BBBs located throughout Canada. The CCBBB estimates that $25 billion is leaving the real business economy and going into the scam economy.

"We're working with the BBBs in the U.S. to alert consumers and businesses not to fall victim to these enticing advertisements," Whitelaw said. Calls to the BBB indicate that those victimized have responded to advertisements in local newspapers or on the Internet offering financial help. When the consumer contacts the toll-free number, they are asked to provide personal information, such as Social Security Number, driver's license number, bank account number, employee number and pay stubs, on the promise that they will receive a loan.

Once the personal information is submitted, the consumer receives a call that he or she has been approved for a loan amount, usually in the range of $5,000 to $25,000. However, before the money can be deposited, the consumer is told to send a certified check or money order (for several hundred to several thousand dollars) to an address in Ontario or another Canadian province. Those consumers that have sent checks have not received the promised loan money.

"Attempts by the Better Business Bureau and Canadian law enforcement and government agencies to contact the companies in question usually prove unsuccessful. It's very seldom that the company can be located to get the loan fee returned to the consumer," Whitelaw said. "Ontario Government staff of the Ministry of Consumer and Commercial Relations are aware of the companies and are seeking to close the operations. Unfortunately these fraudulent operations move quickly and reopen with new names." The BBB advises consumers or business owners seeking credit to thoroughly investigate advertised offers from unfamiliar loan brokers, particularly those originating out-of-state or out-of-country.

"You need to ask yourself, why is this company, which I have never heard of, and which doesn't know me, willing to give me a loan?" said Ken Hunter, president of the U.S.-based Council of Better Business Bureaus. BBB experience indicates that the following are signs of advance fee loan fraud:

  • Pressure to act immediately. Advance fee loan schemers will try to get you to send money or give out personal information (credit card numbers, bank account numbers, social security numbers) before you get any paperwork. Insist on receiving the necessary paperwork before deciding whether to apply for credit.

  • Will not provide location information. If the loan broker hesitates to tell you their physical location, beware that is a common ploy to avoid law enforcement detection. Refuse to do business with the broker until you have their physical address or location and can check them out with the BBB.

  • Questionable connections to established financial institutions. Many of these schemes are merely telephone sales operations, so no connection will exist to an established financial institution. Ask which lenders the "loan broker" deals with, and ask for the physical address of the lender.

Then contact the Better Business Bureau in that city to request information on the lender.
"Finally, don't accept the loan broker's claim that he or she is 'approved' by the BBB," Hunter added. "BBBs do not endorse, recommend or approve companies. Ask what BBB the business claims to be affiliated with, and then contact that particular BBB for a report. A list of BBBs in the U.S. and Canada is available at BBB's web site" Individuals or business owners that suspect they may have already been swindled are urged to file a complaint with the BBB. "Take the time to complain," said Whitelaw. "That way you help warn others not to fall victim, and you assist in getting these fraudulent cross-border operations shut down."

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