Americans burdened by debt, lost income, and poor credit are increasingly falling for scams that promise vast sums or financial relief in exchange for a hefty upfront payment, The Wall Street Journal reports
. The Justice Department is making these “advance-fee” investment cons a high priority as they flourish in tough economic times.
In a typical case, one convicted swindler recently was indicted in Phoenix for collecting advance fees of several hundred thousand dollars from business people who were promised bigger returns from a phony investment trust.
In another case, a Los Angeles-area man is awaiting trial on charges that he cheated distressed homeowners out of thousands of dollars each on the false promise that he would stop their home foreclosures.
“We have victims who normally wouldn’t have been sucked into such a scheme,” said a prosecutor in the Los Angeles area case. “But they were facing eviction.”
In November, the Federal Trade Commission banned mortgage-relief companies from collecting a fee until after a homeowner receives a fair loan-modification offer from a lender.
Consumer complaints related to both advance-fee and credit-repair schemes more than doubled from 2008 to 2009, from 17,000 to 41,000, the FTC says.
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