One of the fastest growing scams in North America is the “bad credit loan” scam. In these scams a legitimate appearing financial company offers individuals with bad credit history a loan, often these loans are “guaranteed” regardless of the client’s credit history, even if they have a bad credit or no credit they will get the loan. All they will have to do is pay an upfront “security deposit” for the loan because of their bad credit history, the problem is that the loan will never arrive and the security deposit will be lost.
Consumers who have lost their jobs are left with bills to pay and have no access to credit, in desperation they turn to alternative ways for credit. Many feel relieved when they find “financial companies” who give them a loan with “bad credit history” or “regardless of past credit history” the excitement quickly turns into frustration when they come to realize that they have been a victim of fraud and will not only not get the loan they were promised, but have also lost their “fee” or “security deposit”.
Sometimes it can be hard to detect these companies, here are some tips to help you differentiate between legitimate financial companies and fraudsters.
Tips To Detect Loan Fraud
- The company asks for an upfront payment. This payment can be disguised as a premium, insurance, collateral payments or a security deposit. It is ILLEGAL to ask for upfront payment for a loan in US and Canada.
- Don’t give out your personal or financial information over the phone or the Internet unless you’re familiar with the company. This includes bank account information, SIN, date of birth, etc. This information could also be used for Identity Theft.
- Legitimate lenders never guarantee or say that you will receive a loan before you apply, or before they have checked out your credit status or contacted your references, especially if you have bad credit or no credit record.
- Do your Research! Type the name of the company into a search engine along with the word scam. The results may reveal a history you didn’t expect. Try to visit their office, if it is local.
- Verify the company – Get the company’s number in the phone book or from directory assistance, and call it to make sure you’re dealing with the company you think you are. Check with the Better Business Bureau to see the company’s record.
What If Fallen Victim to Bad Loan Scams?
- In Canada, call Project Phonebusters in Canada toll-free at 1-888-495-8501.
- In Canada you can also call the Competition Bureau at 1-800-348-5358.
- Contact local Policy as well as Federal Policy (RCMP and FBI)
- File a complaint at ICCC and FTC
Resources:
Do you have any stories to share? Any Tips?
The fraudsters may even use variations of legitimate-sounding names, for example: “Whotson Whyat” (as opposed to Watson Wyatt, which is a global HR consulting firm). The fraudster may even obtain an Ontario Govt business name registration matching their phony name, so as to pacify someone doing very superficial due diligence.
I tried to assist a lady from South Carolina who was victimized by a Toronto-based fraudster advertising in a local paper down there using the name “Wotson Whyat”. She was taken for $3,500 US that she gave as “security” for a $10,000 loan. When she called me, she wasn’t so concerned about getting back her $3,500 deposit, but she just wanted her $10,000 loan advanced to her. Unbelieveable.
These stories do not have happy endings.
Thanks for sharing! sad stories!
Another bad credit scam is when the web site offers to provide the borrower (hopeful) a so-called “list” of bad credit lenders who “guarantee” to approve them quickly. The lists usually cost between $10 to $50.
The lists are usually just a list of links pulled from a Google or Yahoo search.
Rip off.
Yeah, it’s funny that we’re talking about scams and one of THE biggest scams in the financial market is legal – these Payday Loans. Interest and fees that can result in APRs as high 500%
This company took me $3000.00. I was a desperate person looking for a loan after I got discharged from Bankruptcy and was suprised when this company called me and said I was approved for a loan. They did tell me I had to put up $2500.00 for insurance that would secure my loan. I was stupid enough to fall for it and now I am out $3000.00 and they are laughing at me. People out there do not have a heart and take people for there savings when they know the person is desperate.
i had apply for aloan to silvertonfinancialtrust they had wrote back and said i was approved but never got back to me after that i tried calling them but they never answer or nuttin i think its a scam
had a bad experience with those loan company ready to lose car and other obligations coming after me cuz i thought this loan i got would help me get out of trouble. with work hours cut and bills mounting with this stupid loan i got a cash call was the worst mistake .thanks and hopefull u will post it
can someone help me … from Romania working days a year in Canada and I want to make a loan … I can refer you to any one bank? maximu amount that would be?
Regards,
Mmmm….in my family, my mother would whack me around the head if I burped at the table!
I was told I was approved for a 5000$ loan, at pay back of 150$ a month. They wanted 450$ as collateral which I did not pay. I did unfortunately filled out paperwork with financial info included. Can they withdraw money from my account?