BBB Issues National Alert on Loan Scam |
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The Better Business Bureau system issued a national alert to warn consumers about a loan scam that is distributing a counterfeit BBB Reliability Report. The company uses the name Working Capital Corporation and claims to offer "high risk financial aid in relation to personal/debt consultation/automotive/small business or student loans." The business appears to be operating an advance fee loan operation; consumers are complaining to the BBB that they paid money up-front, and did not receive the promised loan.
"We are taking this step to protect and inform the public. Consumers are being misled by the fake BBB Reliability Report that this company is distributing. We want the public to know that this firm is not a member of the BBB, would not meet our membership standards, is not a participant in any of our programs, and does not have a satisfactory record with any Better Business Bureau," said Ken Hunter, president and CEO of the Council of Better Business Bureaus.
Consumers who do business with this company risk loss of the $755 they must pay in advance to SunCorp Insurance to "secure" their loan, and risk becoming victims of identity theft, since loan applicants are asked to provide identification information (driver's license, work ID, social security card) to permit "processing" of their file.
The BBB became aware of the counterfeit Reliability Report when consumers contacted the BBB of Rhode Island, Inc. to ask about information the company provided in connection with their loan application. Included in the packet of information was a "Member Reliability Report", supposedly from the BBB serving New York, New Jersey & Vermont. The business letterhead for Working Capital Corporation includes an address of 775 Minrl (sic) Spring Ave., Pawtucket, RI 02860 and the phone number (866) 896-3847.
According to Hunter, "There is no such BBB. Furthermore, staff from the Rhode Island BBB drove by the company's business address and there is no office there. The U.S. Postal Service recently told us of a new address for the business (23 Lincoln Street, North Providence, RI 02911), which appears to be a private home.
The CBBB vigorously pursues BBB trademark infringements, and won an important court case in 2000 against a vacation/travel club company that was counterfeiting BBB trademarks, using false BBB reports to mislead consumers and falsely implying membership in the BBB.
The CBBB suspects that Working Capital Corp is based in Canada and has alerted appropriate law enforcement agencies.
"The consumers who contacted the BBB about this business did the right thing. Companies are not permitted to use BBB Reliability Reports to solicit business, so any company that does so raises a red flag. Always contact your local BBB to double-check claims of BBB affiliation from suspect businesses, particularly when the deal seems 'too good to be true,'" Hunter said.
BBBs and the Federal Trade Commission advise consumers to avoid advance fee loan brokers. Be aware that legitimate lenders never "guarantee" or promise that you are likely to get a loan before you apply, especially if you have bad credit, no credit or a bankruptcy. Advertisements that promise easy loans generally appear in the classified section of newspapers and magazines, on the Internet or on local cable stations.
"Unfortunately, advertising in recognized media outlets does not guarantee the legitimacy of the company behind the ad. Check with the BBB before responding to any advertisement from an unknown business," Hunter said.
The BBB central web site contains a searchable database of nearly two million BBB reliability reports. To access the Bureau Information System, go to www.bbb.org and click on the "check out a company" icon.
Those who fall victim to such loan scams are encouraged to file a complaint with the BBB. While the chance of recovering the loan application or payment fee is minimal (less than 25% of complaints against this type of business were resolved in 2002), victims can provide information that will help BBBs to warn other consumers and assist in advising the government of possible illegal business practices.
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