BBB warns of advance-payment loan scam

The Better Business Bureau is warning Southeast Missouri residents about a loan scam that cost a Portage­ville, Missouri, man about $7,000.

Bill Smith, an investigator for the bureau's St. Louis office, which covers eastern Missouri and Southern Illinois, cautioned consumers against applying for loans through online companies that require them to put up some of their own money as "insurance" or "collateral."

"People go online, and they basically apply for loans online, which is their first mistake," Smith said.

Scam artists use their application information to contact them with offers of low-interest loans, he said. The scammers ask for money upfront -- sometimes transferred via Green Dot MoneyPak cards -- as a condition of receiving the loan, Smith said.

Greendot MoneyPak cards are similar to a prepaid phone card or a wire transfer, he said. Customers buy the card, which comes with an access code that can be used to take money off the card.

Scammers like to use the cards because they are virtually untraceable, Smith said.

"Any time somebody is offering you a loan via the Internet or by phone, and they are asking for any kind of upfront payment at all ... it's a scam every single time," he said.

After the initial payment, the scammers may claim they have discovered medical bills or other unpaid debts that need to be covered and threaten to report these nonexistent debts to authorities in an attempt to scare the victim into sending more money, Smith said.

"They basically intimidate, terrorize people until they get every dollar they can out of them," he said.

Loan scams often target people who have trouble obtaining loans through conventional lenders, such as banks or credit unions, Smith said.

"People are desperate these days," he said. "Their credit may be bad; job situation may not be good; they may need loans to pay off medical bills ... pay their rent, pay off all kinds of things. ... There are all these vultures waiting out there to take your money."

The victim from Portageville believed he was dealing with a well-known lending company, Smith said. He never received any paperwork from the company, however, and he never received the loan.

epriddy@semissourian.com

388-3642

Pertinent address:

Portageville, MO