Though the economy has made some slight improvements, solid financial ground is still often difficult to find. Individuals and businesses alike are having trouble making ends meet and will often turn to creditors to keep their heads above water. These economic doldrums provide a fertile environment for the unscrupulous to reap a bitter harvest from individuals and small businesses eager for a loan.

It's a common scam, but one that is sadly becoming more and more prevalent in today's rocky market. The nuts and bolts are simple: a scammer will offer a loan once an upfront fee has been paid. And you, grateful to finally have a hand with much needed resources, pay the fee - wiring it off to Canada or the Caribbean or wherever. Ta-da! Easy-peasy. Preying on your desperation, these faux lenders have conned you out of a "fee" (sometimes an exorbitant one at that) and made off with the cash lickety-split. Or if they're particularly brazen, they might find ways to get even more money out of their victims.

According to the Better Business Bureau, most victims of this sort of fraud run across the organization online or through classified advertisements, whether in free local rags or on Craigslist. This of course, doesn't mean that the organization won't try and reach you through a variety of different methods from "sales" calls or mailings.

Their websites will be slick, their demeanor on the phone impeccable. They may even have official looking applications and forms for the loan asking for bank account information and social security number. Of course, this information can later be used for identity theft, but first they're going to see how much money they can wring out the old fashioned way.

Many of these cons will have you mail your fee to a third party who is often out of the country. Of course, they don't necessarily have to be out of the country - they just often are. Typically, con artists of this sort will avoid having anything sent through the US postal service, but this isn't always the case. They will, however, insist that you pay the fee up front before the loan can be issued. They may call the fee by a number of different names - security deposit, insurance, collateral - the net result is the same: money up front for the loan. It is against the law to ask for money up front for a loan.

By the time the victim realizes that the loan hasn't arrived, the website has been pulled down, the phone disconnected, no one who helped to "authorize" the fraudulent loan can be found. All hope of having the loan vanish along with the money wired to secure it.

As with most financial transactions, it's important to do your research on the lending institution. It's your money, you want to make sure that you've weighed all of your options before settling down to business. And looking into the background of an institution is simply part of that process. Check with the Better Business Bureau if you're working with an institution whose name is unfamiliar or strangely reminiscent of a more well-known organization. The BBB also advises that you check with state and federal regulators to ensure that the lending institution is authorized to do business in your state, and if you can't find much (if any) information on the organization consider that a giant waving red flag. Above all, cut and run the second money is asked for in advance of a loan. Additionally, if the purported lender guarantees a loan despite credit history or income, the deal is likely a scam. As most things in life, if it's too good to be true then it probably is.

If you believe that you've been lured in by the machinations of this variety of scam, it's important to report the event to your state Attorney General and the FBI if the "business" operated outside of your state or the country with as much detail as possible. It would be helpful to others if you reported the event to the Better Business Bureau. You may not be able to retrieve the lost funds, but at least you can help prevent others from running into similar cons. In these times of economic hardship there are plenty out there willing to hoodwink those in the depths of financial woe.

For more information please see the Better Business Bureau:

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