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State Regulators Warn Consumers Not to Fall Prey to Loan Schemes

8/20/2003

CONTACT: Tami Torres
850-413-2842

TALLAHASSEE—Chief Financial Officer Tom Gallagher today warned consumers to beware of scam artists impersonating credit unions and banks only to lure consumers into an advance fee loan scheme.

State banking regulators have found newspaper advertisements and websites that appear to be a legitimate bank or credit union, even going so far as to mimic the financial institution's logo. However, neither the Office of Financial Regulation nor other regulatory agencies have been able to link any legitimate credit unions to the advertisement solicitations. The names used by these unauthorized entities to date have been Century Credit Union and Zurich Credit Union.

The advertisements ask interested individuals to contact a 866 toll free number to assist them with credit problems and offer auto loans, personal loans, debt consolidation loans, home loans and home equity loans.

These entities usually ask a potential customer for personal financial information similar to the information requested on a loan application. The consumer is then asked to wire advanced payments/fees, sometimes as much as $2,500, for the loan and payment for debt default insurance on the promise of a loan. The consumer never receives the loan and the information provided may be the basis for further fraud, including identity theft.

"Never accept an advanced fee offer, no matter how good it sounds," Gallagher said. "Financial institutions don't require upfront payments on loans."

Another scheme Gallagher says to watch out for is website fraud involving a legitimate bank or credit union's website being copied and then substituting false phone numbers in the place of the legitimate credit union's phone number. Once again, the scheme directs the consumer to make advance payment and provide personal information.

According to the Federal Deposit Insurance Corporation (FDIC), more than 50 financial institutions across the country have been impersonated.

"Consumers should always be cautious when establishing any financial relationship and confirm that the financial institution that they are dealing with is legitimate," Gallagher said. "Also, be vigilant about keeping your personal information private and secure."

To verify if the financial institution you are dealing with is authorized to do business, you may log on to the Office of Financial Regulation's website at www.dbf.state.fl.us/banking.html or a national website which provides a nationwide data bank of financial institutions www.ffiec.gov/nic.

Gallagher advises consumers interested in obtaining a loan to consider the following tips:

§ Beware of advertisements or e-mails directing you to a bank or loan website. They may be sending you to a counterfeit site.

§ Beware of telephone calls or e-mails asking for help "confirming" your account information - often, they are merely trying to trick you into revealing your personal information, account numbers, etc.

§ It is permissible for real estate lenders to request payment for a credit report or appraisal, and legitimate lenders may charge a non-refundable application fee, but legitimate lenders never "guarantee" or even say that you are likely to get a loan before you apply.

§ Never give your credit card number, bank account information, or Social Security number over the phone or Internet unless you know the company and know why the information is necessary.

Floridians with information regarding any of the above-mentioned activities are encouraged to contact the Department of Financial Services' Consumer Helpline at (800) 342-2762 or the Office of Financial Regulation at (850) 410-9111. You may also contact the National Credit Union Administration's Fraud Hotline at (800) 827-9650 or the Federal Deposit Insurance Corporation at (877) 275-3342.

The department also offers brochures free of charge with information and tips to protect yourself from financial fraud and safeguard your personal financial information. Brochures can be obtained by calling our helpline or by visiting www.fldfs.com and clicking on "Consumer Guides."