Protect Yourself From Hard Money Lending Scams (2019)
Look our for fake lenders so you don’t get ripped off!
Video Transcript
This is Corey Dutton, I’m a private money lender and today I’m going to talk to you about warning signs to look for to spot an online hard money loan scam. So what is the most common type of loan scam that you’re going to find online.
The upfront fee scam.
This is a scam whereby a lender is going to ask you for a fee in advance of giving you the loan. The most common name that this fee scam goes under is an application fee. Remember that the loan terms that these scam artists are offering you are often too good to be true.
It’s human nature to want to believe something that is often too good to be true. That leads us as human beings to often ignore the warning signs don’t ignore the warning signs that I’m going to talk about here in this video.
The Story of Tom and Anita who lost $4,500!
I’m going to tell you a story about Tom and Anita. Tom and Anita are first time real estate investors that were out there looking for a private money loan. Tom and Anita were recently taken by a loan scam to the tune of $4,500!
They found a fake online profile someone posing as Private lender Frank. OK. And they ended up giving this perpetrator $4,500! They lost it. Obviously it was a loan scam.
So what are some of the warning signs that Tom and Anita could have looked for in this online loan scam?
So what you want to do is you want to act like a private investigator when you are looking for private money loans. You need to turn into aP.I. private investigator. You need to really do your research and due diligence on these private money lenders that are offering you money especially if the terms seem too good to be true.
The first thing that you want to do is you analyze the online profile of this individual or company that is offering you a loan. Everyone has some kind of online presence in this day and age. OK.
What kind of things could Tom and Anita have been looking for in the online profile of this private lender Frank to avoid being taken by a loan scam?
I’m going to talk about some of them here. Take a look at this example. When you click on the profile of this person you’re going to see that often if you click on their connections or friends that they don’t have any connections or friends to show. The other thing that you want to look for is the contact info for this individual. Check out this example here.
This person has an e-mail address that is a looks like it has a typo in it. And the phone number is a what’s at phone number. OK that should be a huge clue to you that this person is probably not legitimate then what you want to do is you want to read the person’s posts that they put online and look at their e-mails that they’re sending you. OK. Look check out this post.
This is a good example of a loan scam that someone’s perpetuating and you can start to identify these people online by the way that the the the phrase these posts they all sound the same.
So start to get good at recognizing these scammers by what they’re posting online and then do they have a Web site. Check this Web site out here. This is a good example of a website that has a one page Web site. They’re gathering information from you. But if you look at this there is no contact information and there’s no other pages on the Web. If they don’t have a website it’s probably a scam.
If they do have a site and it looks like this example that I’ve just shown you it looks like a teenager may have put it together last night and then posted it on the web today. It’s probably a scam. OK. Legitimate lenders have usually have a Web site OK. And then finally the photos.
Private Lender Frank scammed Tom and Anita because he stole photos off of a LinkedIn profile of a real individual. He took a bunch of photos of this person and then he created or she created a fake profile on Facebook using these photos these people are super super clever. OK. They’re taking a bunch of photos off of a real person’s profile to make it look like this person is a real person.
Know what to look for and what you can do is you can do a reverse image look up on some of these photos. Download the photos and then go to one of these image tools online. It’s called reverse image search. Look up and see if you can find this person’s photos somewhere else.
Search online to determine if they’ve stolen the photos from someone and then match it with a different name. Are you able to find this person online anywhere other than this particular Web site where you’ve found this individual. OK for example do they have a LinkedIn account? Many don’t!
Do they have a Web site?
Can you find any other information about this person online when you’re searching other than just the information that you’re finding in that one particular site. If you can’t find this individual anywhere else online or any reviews or any other information about them to do to make it to confirm that they’re actually a real person. It’s probably a scam.
How do the terms that you’ve been offered from this lender compare with the terms that you’ve got from other private moneylenders.
Tom and Anita, let’s go back to the story of them again. They were receiving terms from various private money lenders on a deal that they were looking to get funding on and that all the lenders were asking for money down and they were offering them an interest rate of 12 to 14 percent.
This private lender Frank he was asking for no money down and he was offering them an interest rate of 6 percent.
So how do the terms compare between the other lenders that you’ve talked to and this particular lender that may be a scam was offering terms that seem too good to be true.
And then finally the requirements. What are the requirements for approval?
• If there are no requirements or if you’ve been declined by multiple lenders and then all of a sudden this private money lender is popping up and they’re giving you an immediate approval.
• They’re not asking you the right questions.
• They’re not gathering the right information from you.
It’s probably a scam. You’re ready to send in money. Now how are you sending the money? And who are you sending it to?. If you’re sending them money via Western Union, via Venmo, or via zoom this is probably a scam.
It’s one thing that could have prevented Tom and Anita from getting taken by this Private Lender Frank was he gave them wiring instructions to wire him this $4,500 dollars.
But if you looked at the wire instructions the account holder name was a woman’s name. A woman that they had never heard of. That should have been the warning sign right there to say wait this isn’t right.
So does the account holder’s name on the wire instructions match the name of the individual that you’re dealing with or the company that you’re dealing with? If it doesn’t, it’s probably a scam.
Hard money lender references
And finally references, don’t rely too much on references if you ask for references and the lender gets defensive and says that they want to protect the identity of their clients.
It’s probably a scam but if they give you references take those references with a grain of salt because these people are professional scam artists.
They’ve got scripted references ready to go. And most of you won’t be able to get a hold of and if you are you’ll only be able to get a hold of one which is pretty easy to to put up in as a scripted reference so again don’t rely too much on references.
Do you have questions about anything that I’ve said here? Here the warning signs that we’ve talked about here. Leave your question in the comments section below and I will answer them as fast as I can.
