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As a Small Business Owner, you should know when something is way too good to be true. This includes anything that can be over promised and under delivered. In this case, there is no delivery and it will leave you duped.
Before we get into it we'll put it in plain english in bold so you can see the warning.
🚩 DO NOT FALL FOR THE PROMISE OF GETTING A LINE OF CREDIT! DO NOT TAKE A SMALLER AMOUNT OR PAY FOR A LINE OF CREDIT! THERE IS NO SUCH THING AS PAYING FOR GOOD FAITH! 🚩
There are FAKE/SCAM Companies that call Business Owners with a Company name that sounds similar to real Companies like Banks and Hedge Funds. They "qualify" your business for a line of credit and usually say it takes time and until then have the business owner take an advance for a short time (usually 10 days) and charge CRAZY FEES at an unusually high rate for you to pay back quick so they can make quick money. Once this happens, they change their name and disappear.
In a popular Industry Forum called the Daily Funder, Brokers (like us) and Funding Companies come together to ask questions, guide, and call out these types of scams in order to help each other and our Clients. You can find some of the examples here in an index created to expose the tactics and Companies committing fraud.
In one example "I had a merchant that was funded 20k, 20% fees, 1.499 4 days with the promise of LOC" or you can read here a scam alert post about a recent LOC scam that went too far.
What to do if you think you are getting scammed or worse... were scammed!
First, calm down and don't let the guilt of falling for this type of scam get to you. It happens more than you think and the convincing nature of the person who called you trapped you in a vulnerable place. Now breathe and let's plan a way through and maybe a little revenge. Yes, revenge. It's not everyday you'll get advice to do so but professional revenge on a scammer isn't physical but it goes into reporting and making sure EVERYONE knows and protects themselves.
If you were ripped off and had to pay any amount of funds whether it was through wire, zelle, cashapp, venmo (yes, crazy as it seems, it happens) your local police may not be able to help you. Collect any emails, phone numbers, names, and emails that you can along with the bank information and contracts you may have received.
Understand the difference between the FTC and FBI. Many people say they're going to the FBI! Wrong bureau. The Federal Trade Commission has an entire page of what to do if you were scammed. Everything that you read will lead you to REPORT FRAUD: https://reportfraud.ftc.gov/#/ < THIS is the website to report to... not the FBI.
CALL YOUR BANK! Let them know what happened, the dates, and as much information as possible. They may be able to stop/pause any payments and depending on the scammers bank, report them and get more information for the authorities to shut them down. Each bank has their own protocol. You may want to call your bank before reporting to the FTC but definitely ask if they have any guidance as well. They may give you a contact and number to add to the report.
You may be sent to report to the CFPB (which is the Consumer Finance Protection Bureau). Depending on the severity of the case, the CFPB may be able to assist you in the efforts of investigating and reporting. See the links below for more outlets to report and learn about their fair lending experts that know what's true and what's fraud.
This is part of the revenge part... REPORT them on every single scam and fraud website available. Remember, you aren't the only one who will search in the future and your report will help someone else. Here are some sites below.
We are disappointed and ashamed of the ways Brokers go about doing business in these ways and we're committed to help Business Owners understand and steer clear of fraud practices. If you do have any information to share with us so that way we can do our own research and report within the alternative financial industry, please contact us. We may be able to dig a little deeper with our connections and knowledge of recurring fraud. By letting us know we can report to direct financing companies and other technology and SaaS companies of the company and/or people committing fraud. By doing this we can lessen the avenues and possibilities of scammers working within the industry and cutting off their access to Partners.
Here are some alternate websites you can visit to help protect yourself and your business.
🚩 Federal Trade Commission - Report Fraud: Start Here
You won't be able to attach documents to your report. Be as thorough as possible and paste the text of conversations if you need to!
🚩 Federal Trade Commission - Consumer Advice: What to do if you were scammed.
🚩 Share Information on the Scam through Pass it On
🚩 CFPB Fraud and Scams
🚩 Cybercrime Support Network: Business Loan Scams
🚩 Internet Crime Complaint Center (FBI site for reporting internet based crimes)
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