Loan Scammers Love the Credit Crisis

We've long held a special vendetta against advanced-fee loan scammers here on the blog. This con involves asking people who are in desperate need for a loan to wire thousands of dollars to a fake account. The money quickly disappears along with the loan and the company.

As you can imagine, the recent credit crisis and tightening of lending standards has been a big help to their fraudulent business. Here's a story we received from a reader recently:

A few weeks ago I was contacted by someone from a company called Stockwell Financial Services. They represented to me that they would find me a loan for $10,000. To make a long and unbearable story short, they scammed me for over $3,400 by asking for "prepayment" of the loans to assure collateral. I am not the only one that has been defrauded. There are others that have reported them. They closed up their website and their phones and left (they claimed they were in Oklahoma). What can I do?

Unfortunately, once the money is gone...it's gone. The scammers have their victims wire the funds, so the transaction isn't covered by credit card fraud protections or mail fraud laws. The only thing our poor reader can do is to report the scam to the FTC, the Oklahoma Attorney General and PhoneBusters (since most of the time the money is wired to Canada). And coming forward with your story is also a great way to help warn others about the scam.

If you do encounter a loan offer that sounds too good to be true, there are some simple steps you can take to make sure that you're not going to be a scam victim. It can be very tough:

• Never wire money related to a loan. No authentic lender will ever ask you to send funds via Western Union.
• Be very skeptical of personal loan offers that require insurance or downpayment deposits. Real personal loans never ask for this sort of up-front payment.
• Ask for the offer details in writing by mail. Scam lenders will gladly email you fake loan documents, but they'll avoid mailing you details because it constitutes mail fraud.
• If you still think the loan offer may be authentic (which is not likely), offer to send your payment by credit card. The scam lender will almost certainly decline to work with you.
• Do not apply for loans online with unsecure or unknown websites. Here are some tips for spotting a scam site.
• Google the name of the so-called lender to see if there are reports of fraud related to their business. A quick search for "Stockwell Financial Services" turned up several complaints.

In this time of credit troubles, please be extra vigilant with your money!

Emily Davidson – Credit.com's personal finance expert and former TransUnion credit expert. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.

Comments

[The Financial Blog]

What hurts more is that they will be preying on poor people and the elderly

[Gerri]

This is only going to get worse with the current crisis unfortunately.

[Ron]

my wife and i were scammed by stockwell financial services. we applied for a loan through ecredit.com, and were contacted by this company. they said they had a $5,000 loan for us if we would send them the first 5 payments which equaled $775. we sent that and they said our collateral payment was insufficient due to our low credit score, and we must said another $775. we sent that and the next day they were gone. their phones shut down and their website was suspended. we lost $1550. we are now working with the federal trade commission. this is a scam that is easily fallen for in these desperate financial times. please dont fall victim to this.

-Ron
Pigeon Forge, TN.