Credit Crunch Fuels Rise in 'Advance Fee' Schemes
By JENNIFER LEVITZ and STEVE STECKLOW
July 1, 2008; Page A3
Federal and state authorities say the nation's housing slump and credit squeeze are resulting in a spike in reports of companies preying on frustrated borrowers who are having difficulty securing commercial loans through conventional sources.
The Federal Bureau of Investigation, the Federal Deposit Insurance Corp. and state regulators across the country say they have seen an increase in "advance fee" loan schemes in which companies charge would-be borrowers upfront fees but never seriously try to find financing for their projects.
The FBI says it recently received "several hundred" complaints about advance-fee loan schemes. "We saw some in 2007, but not nearly to the level we're seeing this year," says Cathy Milhoan, an FBI spokeswoman in Washington. On its Web site, the agency includes "advance fee scheme" in a warning to the public about "common fraud schemes."
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