Loan scam rackets can bring in millions nationwide in a very short time. Unsuspecting people send in a fee in return for a promised loan. Because interested individuals are often in debt trouble, the loss of the fee through this fraud is especially devastating.
Typically, advertisers place a three to four line in-column classified or late night broadcast ad offering personal or debt consolidation loans. Amounts of potential loans are often included. Rarely is a company name or street address location given, but there is either a toll-free or a 900 toll number provided.
When a citizen does call, a minimal amount of information is asked for. Then, a so-called "approval call-back" is made to the consumer. Virtually everyone is "approved". Telephone operators are trained to say they are not the actual lender. They claim instead to have located a lender who will work with the borrower. The citizen is then asked to send a fee, often by overnight mail, or by courier to avoid federal mail fraud prosecution. They are also asked to send other information such as a copy of their driver's license, copy of their last pay stub, copy of their social security card, etc.
If pressed, such firms often say they are licensed (even if they are not). They may have a legitimate sounding answer to almost any question.