Anatomy of a Scam: Loan Scheme With Signs of Foul Play

GreenPoint Capital is an advanced fee loan company based in Lansing, Mich. – or at least, it claims to be.

Earlier this year, the Better Business Bureau issued a scam alert that warned consumers to beware of GreenPoint.

Turns out several consumers had contacted the BBB, asking about the company. One of them said GreenPoint failed to honor a contract after she paid it $800 by wire transfer. She was told a $5,000 loan would be in her account, but the money never showed up. A GreenPoint representative called to ask for another $800. The company took everything, according to the alert.

An investigation by the BBB found the business was based in a residential neighborhood of Lansing, and that it was not licensed to issue loans.

I don’t see a lot of BBB scam alerts, and that’s mostly because the organization has a well-earned reputation for coddling companies. So to see it go after GreenPoint is refreshing to this consumer advocate.

How could GreenPoint’s victims have avoided getting scammed? Several telltale signs were evident. Let’s take a look at each one.

They asked their victims to wire money.

Big red flag, my friends! Never, ever wire money. Why? Because once it’s gone there’s no way to get it back. Paying by credit card or even by check offers more consumer protections. A credit card bill can be disputed, and if it’s fraudulent, reversed. And you can stop payment on a check. When you wire money, there are no second chances. Which is why scammers love wiring money – and why you should avoid it at all costs.

They asked for money to get money.

That’s classic scam behavior. I see it often with “free” cruises where you have to pay a “processing fee” or a sweepstakes where your winnings can be collected with a small surcharge. It’s a swindle perfected in Nigeria and being perpetrated right here at home, on our own citizens. While it’s true that loans come with certain fees, those fees are regulated and reasonable, not exorbitant.

Oh, and did you catch the bait-and-switch?

That’s yet another sign. Honest businesses don’t change the terms of the deal after you’ve agreed to them. Asking for another $800 should have been the final straw. But the victim was already vested in the scam, and apparently couldn’t see what was happening.

Work from home.

Not every home-based business is a scam, but certain businesses should be licensed and operate from a storefront. This is the kind of company that should have been, but wasn’t. A simple online search for the company would have probably revealed that this was a questionable operation, with no published phone number and no license to issue loans. When you’re dealing with a business you’ve never heard of, it’s important to do a little research before sending it thousands of dollars.

On a difficulty scale of 1 to 10, this scam was a zero, that’s how easy it was to spot. So many signs! With the BBB jumping in, make that a minus one. And guess what? If authorities hadn’t shut it down, even more people would have fallen for it.

Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twitter and Facebook or send him your questions at by email.