State agency issues loan scam warning

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COLUMBUS — The Ohio Department of Commerce warns Ohioans to be on guard against online companies pretending to offer loans, but who require up-front fees before the “loan” can be made.

These “companies”, which typically solicit customers on websites using ever-changing fictitious names, may purport to have business addresses in Ohio, which often are fictitious. The businesses are not registered with the Ohio Secretary of State’s Office and not licensed by the Department of Commerce’s Division of Financial Institutions.

“If a loan company demands money before you receive a loan, don’t even think about it,” said David Goodman, Director of the Ohio Department of Commerce. “Never send money with the promise that you’ll obtain a loan.  If you do, you’ll lose your money and there will be no loan.”

Goodman offers the following tips to Ohioans:

• Always check to see if the financial service entity is licensed by the Division of Financial Institutions. (Go to www.com.ohio.gov/fiin/elicense.aspx to learn if it is licensed or call the Consumer Affairs Hotline at 866.278.0003).
• Never provide personal or financial information to a company that is not properly licensed, particularly your Social Security number or bank account information.
• Never send money in advance of receiving a loan (other than for an appraisal report or possibly a credit report).

These companies operate under a variety of names, but the loan documents look virtually the same as similar companies.  Their websites may push consumers to call a toll-free number.  Often it traces back to Canada.

Some companies tell consumers they are not eligible for a traditional loan, and a third-party investor will finance it. Before the loan can be processed, they say, the consumer needs to make a down payment or purchase special loan insurance.

The consumer is instructed to send money out-of-state or to Canada to cover those costs.  A consumer was recently instructed to send money to Jamaica. After they receive payment, the companies may tell consumers that a complication has developed and another payment is needed before the loan can be approved. Unfortunately, some consumers have sent multiple payments and still didn’t obtain a loan.

If Ohioans suspect unlicensed lending activity, they should report it to the department’s Consumer Affairs Hotline at webdfi-cf@com.state.oh.us or by calling the above telephone number.