Tuesday, October 11, 2011 3:32:00 PM
This is when firms, unable to secure funding from the banks, approach what they believe are legitimate brokers for help. The fraudsters tell them that they can find loand, but ask for an upfront administration fee, often followed by further requestes for fees for 'due diligence' or 'added work'. Inevitably the loan never appears and the fees are not returned.
Advance fee fraud first came to light during the recession of the early Nineties, and involves many variations on the same theme - pay up front for loans that are never provided. This damaged the reputation of commercial finance brokers, and in 1992 the National Association of Commercial Finance Brokers was set up to improve the reputation of genuine finance brokers. Chief executive Adam Tyler recently said "After we set up, the advance fee fraud virtually disappeared. However, it made a reappearance in 2008 and in the past six months it has exploded. Many small firms are unaware that there are many alternative lenders to the High Street banks. A genuine broker can help them, but we are not talking about genuine brokers - these are fraudsters looking to make easy money." Tyler said that he had passed 'more than 250 cases' of advance fee fraud to the National Fraud Authority, a government agency, in the last two years, with an average individual loss of £5,000 per case.
Clients with question marks about a broker can contact the NACFB to ascertain if the broker they propose to deal with is a member of the association.