Con artists come out of the woodwork during times of uncertainty and take advantage of those who are desperate for help, and this last recession has been no exception. It’s been reported that a new wave of fake credit unions are promising to loan people at under-market interest rates.
These fake credit unions are offering consumers unusually good loans then charging them with a “processing fee” for the loan application. Once they receive the processing-fee from the customer, they take the application fee and “deny the loan”, but it turns out the supposed “credit union” probably doesn’t actually exist and there was never a possibility that the consumer would get a loan to begin with.
One allegedly fraudulent operation was running ads in national newspapers around the country promising that it had money to lend. The Los Angeles Times was one of many newspapers that ended up running the ads. The fake credit union even listed a real address that turned out to be the street address of a shopping mall! Two state agencies from Michigan and Pennsylvania blew the lid off that particular operation, but there’s still the possibility that similarly minded con artists will use the same scam to get more money out of victims.
These types of scams are relatively easy to spot. Typically these fake loan organizations will advertise themselves as “loan brokers”, and will charge you a fee to process your loan application. Never pay anyone a fee to apply for any form of loan and you’ll be protected from all of these types of scams.