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Thousands of Americans are losing money every day to scam artists operating beyond the boundaries of the United States. In many cases, these international crooks are sitting across the border in Canada - just far enough away from U.S. laws and jurisdiction to reduce the chances that American victims will ever recover their money.
Through telemarketing and print ads, cross-border scam artists offer advance-fee loans, lucrative sounding investment opportunities, and bogus prize promotions. Foreign lottery ticket resales also lure Americans to buy phony "low-risk" chances in supposed high-stakes lotteries. Victims of these scams not only lose their money, but also risk violating federal law, which generally prohibits playing lotteries by mail or phone.
Cross-border scams seem to be a growth industry. According to the Federal Trade Commission's consumer complaint database, Quebec, Ontario, and British Columbia now rank second, fourth, and 13th among states and provinces as a geographic source of fraudulent telemarketing activity. U.S. law enforcement agents say that con artists may be setting up shop in neighboring countries to avoid prosecution under the Telemarketing Sales Rule, which has been in effect since Dec. 31, 1995. The law sets operating standards for legitimate telemarketers, spells out stiff penalties for fraudulent ones, and for the first time, gives state law enforcement agents the power to prosecute across state lines.
Although the Federal Trade Commission and state governments have joined forces to present a united front in the fight against telephone fraud by sharing information and resources, consumers still are in the best position to spot - and stop - these kinds of scams. Identifying cross-border fraud can be daunting. The reasons: con artists based in Canada often give a "mail drop" address in a U.S. city. In addition, Canada and most Caribbean island nations use telephone area codes that are integrated with the U.S. phone system and accessible by direct dialing, without long, cumbersome, and obvious foreign "country-codes."
Here's how you can stop telephone fraud, whether it's cross-border or cross-town:
The prospective borrower is lured by an ad (usually in a free "shopper" type publication) which offers consolidation loans for the credit stressed. When called, the scam artist takes some basic credit information and promises a call back after shopping the potential loan among his lenders. In an hour or so, the scam artist calls back with the good news that the loan has been placed at a favorable rate and a workable payment but he needs a broker fee (ranging from a couple of hundred to as much as two thousand dollars) sent via UPS and in the form of a cashiers check or money order.
Once the money is sent, there is no more contact and, of course, no loan and the telephone number you called has been disconnected or does not answer.
Collecting brokerage fees in advance of making the loan is illegal in Indiana. So, right off there is a clue that the broker is not on the level. Much more important, we do not know of anyone who has ever gotten a loan through one of those operators.
The problem lies in evasiveness, skillful fraud, and even an international border. Most of the companies are from Canada, presumably so there will be little or no involvement of law enforcement from the United States. People who send money find that the company's telephone is no longer in service just a few days later and there is not a government agency to help. Every regulator and law enforcement official have said "We simply can't catch up with them."
FTC Stops Card Scheme
On January 17, 2003, the Federal Trade Commission filed charges against seven corporations and nine individuals for engaging in deceptive and unfair activities in the marketing of advance-fee credit card packages under the names Advantage Capital, Capital First and Premier One. Under the alleged scam, Canadian front men in a network of boiler rooms targeted people with poor credit histories and offered credit cards that never materialized. Instead, customers were put through an "an incomprehensible, digitally recorded verification process to conceal that the proffered credit card is actually a benefit package that includes an application for a stored-value pay as you go card." However, FTC noted that the stored-value card never materialized, instead consumers' bank accounts were charged for the cards and other expensive and dubious products. Consumers were charged about $174 for the bogus credit card package and $50 to $100 for other products, some with recurring monthly charges.
The complaint alleges that the defendants violated the FTC Act, the Telemarketing Sales Rule, and Gramm-Leach-Bliley Act by:
Law enforcement agencies and consumer advocates fear that foreign scam artists are using a fictitious Maine location to add credibility to their illicit loan broker operation. Government agencies in Maine have been receiving telephone calls from consumers located all over the country asking questions about the Canadian loan company, which falsely claims to have an office in Maine.
The Canadian company utilizes the name "Mett-Life," probably in an effort to benefit from the reputation of the similarly named, worldwide insurance company. Consumers who call the toll-free number listed in their ad quickly receive an "acceptance letter" indicating that they have been approved for unsecured loans ranging from $15,000 to $60,000. Despite the company's earlier "no advance fee" pledge, consumers are instructed to obtain a money order for $500 to $1,500 "for insurance purposes." They are directed to deliver the money and the signed documents to a Canadian post office box by private, overnight courier service.
If the consumers call the company to express concerns about sending money out of the country, they are told not to worry because the company has an office at 2553 Western Avenue, Augusta, Maine. There is no such address. It is likely that consumers have already lost tens of thousands of dollars on the scam. Consumers have told officials that once they deliver the required fee, they never receive a loan nor do they hear from the company again.
Canadian authorities, concerned by the number of scams operating from their country, have vigorously prosecuted perpetrators when they have been caught. However, most such operations are difficult to pin down, because they use a combination of mail drops, call forwarding and courier services.
Such scam artists will also give false addresses and names in other states. Usually not the state the caller is in.
The Canadian advance fee loan scam artists are becoming more sophisticated. We have a report of "identity theft" of a legitimate business from Michigan. The stolen identity is being used by frauds in Toronto to mulct funds from businessmen. Mr. David C. Campbell (231-547-9989) of the legitimate Michigan concern, Statewide Financial (which is operated by his son, David B. Campbell, 248-593-0500) reports that his company's name, etc. is being used in several states as a front for a scam.
The apparent frauds use the holding company name Lafayette Lending Group and explain to prospective borrowers who answer their newspaper ad that their subsidiary -- Statewide Financial -- handles the brokering of loans; if the customer does due diligence, all seems in order. The customer is later advised that the loan is approved pending receipt of a 1% fee which should go via Western Union to the investor in Toronto. Of course, there is no loan. Victims have been reported in MO, VA, IN and WA.
The "investor" is Jerry Kajkowski, 65 Forest Manor, Toronto, ZJ1M5 and the phone # is 888-604-9158, Ex 5421.
Never Send Money to Get a Loan!!!
Caution and common sense are the best defenses against being victimized. First, if you are creditworthy, there are hundred of lenders in this State who are happy to service you. If you are not creditworthy, sending your money hundreds of miles and to a foreign country isn't going to help. Second, the advance fee and the Canadian address are dead giveaways that something isn't right.
These Canadian loan scams are being combated by Phone Busters, a national task force against telemarketing fraud coordinated by the Ontario Provincial Police. PhoneBusters can be reached at P. O. Box 686, North Bay, Ontario, Canada P1B8J8. Telephone: 888-495-8501 Fax: 705-494-4008. They can be reached via e-mail at firstname.lastname@example.org.
The Federal Trade Commission (FTC) is making it easier and cheaper for consumers to report a fraud to the law enforcement agency through a toll-free Consumer Help Line, 1-877-FTC- HELP (1-877-382-4357). The line is staffed by counselors from 9 a.m. to 8 p.m., Eastern Time, Monday through Friday. Through the toll-free Help Line, consumers can get helpful information on the spot. The FTC can't intervene in individual disputes, but consumer complaint information is crucial to the enforcement of consumer protection laws. The FTC web site is http://www.ftc.gov/ or you can write to FTC, Consumer Response Center, Washington DC 20580-0001.