Consumer Car Buying Advice Blog

In their latest move to defraud unsuspecting consumers, scammers are attempting to bilk consumers by soliciting loans for an imaginary Federal Reserve lending program.

New scheme involves nonexistent program

According to the latest news release from the Federal Reserve Board, the ongoing credit crisis has encouraged fraudsters, crawling out from under their rocks, to try a different approach to separating consumers from what little they may have left in their bank accounts. And here at Auto Credit Express, we wanted you to know what this was all about.

According to the Fed, these solicitations can come in the form of emails, direct mail and classified ads and they promise recipients access to personal loans through a Federal Reserve Program that is entirely fictional.

How you get cheated

According to the press release, “Under this fraudulent scheme, targeted individuals are told that that they can work through a broker to access a Federal Reserve program that extends sizable secured loans to consumers. Consumers are encouraged to deposit large sums of money into a bank account, under the guise of a security deposit, in order to receive the purported loan.”

As it is further explained, not only is there no such program, but under the current circumstances, there can never be such a program, since the Federal Reserve does not directly sponsor consumer lending programs. The Fed loans money to banks, through the reserve system, not to people. Remember that.

Since finding out about the scam, the Federal Reserve has referred the matter “to the appropriate authorities for action.”

What you can do

As with any solicitation for personal information and, in this case, your money, you should takes steps to verify the legitimacy of the agency or service provider before entering into any kind of business arrangement with them. The Federal Reserve also advises consumers to “do business only with reputable lenders and to shop around for the most favorable loan terms.”

Consumers with questions about solicitations that they suspect may be fraudulent are encouraged to contact the Federal Reserve Board Consumer Help Center at http://www.federalreserveconsumerhelp.gov or by calling 1-888-851-1920.

The Bottom Line – caveat emptor

Here at Auto Credit Express, we know that times are tough out there for consumers out there – many of whom are our customers. This is why it’s so important to be on the lookout for any type of bail-out scheme that even has the slightest tinge of being a con. Do your homework before giving out any personal information. I know this saying is worn, but if it seems too good to be true, it probably is. As a consumer, you should beware.

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