Scam targets people who are desperate for money
DETROIT—Brian Young thought he was talking with a real banker who had a legitimate strategy to boost his credit score and lend him a quick $1,000.
Instead, he was talking with a crook who knew how to steal a cool $500.
It’s a scam that many don’t want to admit to falling for, but it’s becoming more common as fraudsters target consumers burdened by debt. Many times, people who are struggling to pay student loans or even holiday bills are being tricked into paying money upfront to get a loan. Some consumers have reported losing thousands of dollars in loan-related scams.
“I wanted to bring this to light to save somebody else,” Young said. “At the same time, this is embarrassing as hell.”
The Better Business Bureau reported that the median amount lost on advance fees related to loans amounted to about $600 in 2017—up from around $510 in 2016, according to data from its Scam Tracker service. Advance fee loan scams ranked No. 4 among the top riskiest scams—after online purchases, investment-related scams and scams promising jobs, according to the BBB.
Some consumers admit some steps, which can involve putting money on Target or Best Buy gift cards, sounded a little crazy. But they needed the money.
As one victim told the Better Business Bureau, “desperate people do desperate things.”
The loan-related scams can take odd twists. Some crooks tell consumers that, as part of the deal, they must pay a small loan back immediately to raise a credit score and get a bigger loan.
Scammers also have told consumers that their credit was too low, so they’d need to buy “insurance” to cover the loan and then requested that they send money via a MoneyGram or put money on a gift card.
Like other scams, such as those involving con artists impersonating the Internal Revenue Service, consumers are told to put money on Walmart gift cards, Target gift cards, Best Buy gift cards and the like to pay some cost associated with this fake loan.
Of course, if someone is lending you money, they’re not going to ask you to immediately give it back to them. You don’t send money to a loan company in order to obtain a loan.
In many cases, con artists claim to represent real companies and government agencies to appear legitimate.
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Tax refund before you even file? It’s happening. Young, a retired warehouse manager who lives in Farmington Hills, Mich., told me that he wanted to consolidate some debt in January and pay off some bills after the holidays.
“I just kind of got in a jam,” Young said. “It was Christmas time and other things.”
In order to juggle his bills, he decided to surf the web for a small loan.
“I went online and hit a bunch of different places,” Young said. “So then, I got a call from this guy.”
The guy was named Simon—Young can’t remember the last name—and Simon claimed he was from a Pelican Bank. He told Young to make another call in the morning in order to get more information on a loan.
Young, 64, made the call and talked to a man named Oscar. And that’s where things started going off the rails.
Oscar supposedly was willing to forward Young a $1,000 loan but before that loan could happen, they would need to bring up his credit score.
As part of the plan, the bank would pay off Young’s $525 credit card bill on a Capital One card.
“Sure enough, he pays off my credit card,” Young said.
Young said he went online and could see a statement showing that the credit card was paid off.
“I’m going ‘OK, this is kind of lining up or whatever,” Young said.
Then, Oscar instructs Young to go to Target or Walmart to put $500 on a gift card to cover that original credit card payment and pay the bank back.
“I go to Target, I do that, I call Oscar back,” Young said.
After buying the gift card, Young read Oscar the numbers on the card over the phone.
The next day $1,000 was supposed to show up in Young’s account.
“I attempt to call Oscar back, no answer,” Young said. “At that point, I’m going, I think I’ve just been had.”
As for Pelican Bank? There is a Pelican State Credit Union, based in Baton Rouge, which has heard of reports of people getting called by Pelican, too. But it’s not the credit union making those calls. It’s part of a scam.
Scammers can pretend to be from all sorts of places. First National Bank, for example, is a fairly common name in the industry, so that can be an easy, go-to name for scammers. Other scammers make phone calls using well-known names, such as Advance America, to pitch online personal loans.
Young swears he saw his statement online to show where the money was paid off, but somehow the crooks got that money back the next day. The $525 in debt returned to his statement.
How could that happen? It could be possible crooks might have been able to make that move, if they had his account number, according to a spokesperson for the Federal Trade Commission.
Someone might give their bank account information or credit card number to scammers. Or scammers might obtain it illegally. The FTC notes it becomes hard to contest fraud or “unauthorized” credit card use when a consumer voluntarily gives out the account information.