FTC, STATES CONTINUE CRACKDOWN ON TELEMARKETERS AND NET
37 COMPANIES
AND INDIVIDUALS OFFERING LOANS THAT NEVER ARRIVE
Latest Targets Are Military Personnel
In a continuing effort to target corporations and individuals
that guarantee loans for an advance fee and never deliver,
the Federal Trade Commission, the state Attorneys General
of Illinois and Missouri, and the Idaho Department of Finance
announced the results of the latest crackdown on 37 telemarketing
firms and individuals allegedly engaged in advance fee loan
scams. The crackdown also includes the participation of
Canadian law enforcement authorities, who have targeted
a company and two individuals allegedly telemarketing from
Canada to United States residents. According to the Federal
Trade Commission, the latest targets of advance fee loan
scams include U.S. military personnel, who, like other consumers,
are attracted by promises these scams make of guaranteed
credit approval.
"Advance fee loan fraud poses a significant financial
threat to consumers," said Jodie Bernstein, Director
of the FTC's Bureau of Consumer Protection. "Recognizing
this, the FTC and state law enforcement agencies, together
with our Canadian counterparts, have combined our resources
to launch an aggressive campaign to attack this form of
fraudulent telemarketing. Our current investigations show
that the advance fee loan scam artists continue to operate
out of Canada. But, by joining forces, Canadian provincial
and American federal and state officials are pursuing these
operators on both sides of the border. Our message to these
fraudulent telemarketers is: We will not permit you to use
the border to prey on consumers. We can and will reach out
and stop you."
The FTC cases announced include a variety of schemes that
the FTC alleged have
defrauded more than ten thousand consumers nationwide. Several
of the companies and individuals named in the sweep do business
under a series of assumed names, promising consumers that
in return for the payment of a fee in advance, they will
receive a major credit card with a high credit limit. Another
telemarketing operation named in the sweep is an individual
advance fee loan broker acting as an alleged "turn
down room" -- a third-party that denies applications
for loans and other credit -- for a number of fraudulent
telemarketing companies operating in the United States from
Canada. Yet another company named in the sweep is alleged
to have used an intricate
web of interrelated entities to do not only its own telemarketing,
but also to contract with individual third-party telemarketers-for-hire
to provide substantial assistance and support to its telemarketing
operations.
Fraudulent advance fee loan schemes particularly prey on
vulnerable consumers -- the unemployed, those who have bad
credit ratings, or those in immediate need of money for
emergencies. Most advance fee loan telemarketers snare consumers
through advertisements in various local newspapers and tabloids,
on cable television, on the Internet and in Yellow Pages
telephone directories. Ads promising "money to loan
. . . regardless of credit history" lure consumers
into paying fees that range from $25 to several hundred
dollars in advance of receiving loans or credit cards that
are "guaranteed." In many instances, consumers
never receive the promised loans or credit cards, and either
never hear from the loan companies again or are later told
by "turn down rooms" that they are ineligible
for the credit, the FTC said.
Under the FTC's Telemarketing Sales Rule, which went into
effect December 31, 1995, a telemarketer who guarantees
consumers a loan or other form of credit, or who claims
he or she can arrange such credit for a consumer, is prohibited
from asking consumers to pay any money before they receive
the loan or credit.
Tips for Military Personnel to
Avoid Advance Loan Scams
