Consumer Action by Aleksandra Todorova
smartmoney.com  published February 6, 2009 

A dismal economy, tight lending standards and mounting job losses have created the perfect storm for cash-strapped consumers and the perfect opportunity for scammers.

Despite warnings from state attorney generals and organizations like the Better Business Bureau and the Federal Trade Commission, a growing number of consumers are falling victim to so-called advance-fee loan scams. Posing as overly-generous lenders with loose standards, scammers say they will give consumers a loan as long as they wire them money as insurance or collateral first. However, once the money is wired, it’s gone — and the victim never hears from the "lender" again.

When the economy turns south, [these scams] become more of a concern because they prey on people who are desperate to pay their bills, says Alison Southwick, a spokeswoman for the Council of Better Business Bureaus, or BBB.

In 2008, the BBB received 2,300 complaints from victims, a 21% increase from the year before. And that’s just the tip of the iceberg, Southwick says."People are either embarrassed to admit they fell victim to such a scam, or they don’t know who to complain to."
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Here’s how to spot an advance-fee loan scam and protect yourself. Continue reading »