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Better Business Bureau ®
Start With Trust®
Chicago and Northern Illinois
The Better Business Bureau Issues Alert On Loan Scam
August 08, 2014

Editor’s Note: We have victims willing to speak to the media.

Despite an improving economy, thousands of individuals still find themselves cash strapped. Armed with that knowledge, scammers continue to rip-off consumers who can least afford it. The Better Business Bureau (BBB) has received reports from a steady number of individuals who were the targets of or have fallen victim to loan scams. Today, scammers are using the Internet, phone and mail to reach their victims.

Chicago resident Stephen Hildebrand applied for an online loan. From the one application, he received three responses that promised guaranteed loans of $5,000. To receive the cash from a company calling itself Eloan.com he paid an upfront fee of $550. He then paid $423.80 for a loan from GE Capital Bank. Mr. Hildebrand says, “I got a third call stating I could get a loan from $2,000 to $7,000, but I did not continue a full conversation with them.” He also stated, “All the calls came on the same day and that they used the same verbiage word for word.”

“Advance fee loan scams are not new and they flourish when times are tough, and people are struggling to get by,” said Steve J. Bernas president and CEO of the Better Business Bureau serving Chicago and Northern Illinois. “In most cases desperation is a factor for people grasping for a financial lifeline. It only worsens the situation when they fall victim to one of these scams.”

Using all means available scammers will sometimes pretend to represent an existing business. That is the case in one scheme where the scammer sent loan applications in the name of a payday lender located on Cicero Ave. in Chicago. There was no need to visit the office since the application could be completed online. All that was needed to be approved for the “instant” personal loan was the advance payment of $230.00 which would prove that the applicant could afford to make the payments on the $5,000 loan.

The application required that the individual applying for the loan purchase a GreenDot Moneypak card and have the advanced payment loaded onto the card, and provide the PIN number to the scammer. Once the payment was loaded, the individual was told to provide the card and pin number to the scammer.

Individuals who run these loan scams can be relentless. Andy Cordell of Rockford, IL says, “I received 15-20 calls claiming I’d been approved for a loan from American Financial Services that I never applied for.” Angry about the repeated calls to his home phone Mr. Cordell said “I did the same thing to them. I called and left 20-30 messages. No one ever picked-up until I called using my cell phone. That’s when I got the name of the business.”

Bernas noted, “Loan scams are big business. Reports state that in recent years, victims across the country have lost an estimated quarter million dollars to these scams.”

BBB advises cash strapped individuals to look for the red flags of a loan scam:

  • A lender isn’t interested in your credit history – A lender who uses terms such as “Bad Credit? No problem” or “Get money fast” and “No hassle loan guaranteed”
  • Advanced fees and those that aren’t disclosed clearly and prominently – Any upfront fee that the lender wants to collect before granting the loan is a cue to walk away.
  • A loan offered by phone – It is illegal for companies doing business by phone in the U.S. to promise a loan and ask you to pay for it before they deliver.
  • A lender who uses a copy-cat or wanna-be name – Scammers give their companies names that sound like well-known businesses and create websites that look professional; some may even produce forged paperwork.
  • The lender is not registered in your state – Lenders and loan brokers are required to register with the Illinois Department of Financial and Professional Regulation.
  • Lender who ask you to wire money or pay an individual – Don’t make a payment for a loan directly to an individual or wire money to another country.

For more information on finding businesses you can trust, visit bbb.org and follow us on Facebook and Twitter.

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The BBB is a non-profit, non-governmental organization.  It is supported by businesses to protect consumers against scams and other unethical business practices.  The group accomplishes this by educating both consumers and businesses, and by highlighting trustworthy businesses. By developing reports and ratings on businesses and charitable organizations, the BBB encourages people to use these as resources and referrals to utilize the free services before making a purchase or donation. The BBB helps resolve buyer/seller complaints through its alternative dispute resolution process. In 2013, the BBB provided more than 22,600,000 instances of service.  Over 80 percent of consumer complaints to the BBB were resolved. The Better Business Bureau serving Chicago and Northern Illinois is a member of the international BBB system that services the United States, Canada and Mexico.