Editorial: Loan scam hits close to home

If you're not sure if something is a scam, ask the BBB

An Oak Bay address was recently used by a loan scammer who managed to fleece a victim for $7,000.

The fake loan company set up a website with an Oak Bay address and pretended to offer online loans. After the consumer paid the requested fees, the website disappeared and the phone was disconnected, as is typical in these kinds of scams.

“The big red flag here is this $7,000 was for legal fees, administration fees, up-front costs to secure the loan, paperwork,” notes BBB-Vancouver Island Executive Director Rosalind Scott. “Reputable financial lenders do not charge any of that, costs are built into the loan.”

While the Oak Bay address may be a new twist in this particular case, the scam – and many others like it – are nothing new.

Each year, the Better Business Bureau releases its top 10 scams of the year, but typically, they’re just new twists on age-old favourites of those keen to make a quick buck from the unsuspecting.

While the specifics of the consumer in this case are not known, it’s really of no consequence: scams happen to people of all ages and socioeconomic levels. As we become savvy to one scam, another slightly altered version pops up in its place.

In terms of online lenders, thoroughly research a company before providing any information, Scott advises. Make sure it’s a legitimate, reputable online lender, and try to find a physical, brick-and-mortar location.

Beyond fleecing consumers of cash directly, some fake companies appear to be online lenders but are actually collecting people’s personal information to sell.

And as with any contract, get every detail of the loan agreement in writing and read the fine print. Reluctance to provide a detailed copy of an agreement is yet another red flag.

The bottom line for consumers of all ages, backgrounds and financial means: If you’re not sure, ask, Scott emphasizes. “This is what we are here for. …We have that information and if we don’t have it we will investigate so that we do have it. We can help people not to lose $7,000.”