People desperate for cash fall for loan scams

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.

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 gift cards 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.

In many cases, con artists claim to represent real companies and government agencies to appear legitimate.

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.

Consumers should never share sensitive information like their Social Security number or even just the last four digits of their Social Security number, with unfamiliar parties, according to a Capital One spokesperson. Do not give your credit card account number out to people you don’t know, as well.

Target notes on its web site: “Businesses do not accept payments in the form of Target GiftCards. For example, you will never be asked to pay your utility bills, bail money, debt collection and hospital bills with Target GiftCards.

“No legitimate government entity, including the IRS, Treasury Department, FBI or local police department, will accept any form of gift cards as payment.”

Scammers use gift cards — iTunes cards, Amazon cards, you name it — to get cash quickly, leaving consumers unable to get their money back.

Susan Tompor is a financial columnist for the Detroit Free Press.