Spotting And Dealing With Online Scams

Leicestershire based master broker, UK Property Finance, has recently provided additional training for the company’s staff to help ensure that applicants attempting to use the brokerage are not being exploited by fraudsters, especially via online dating and so called “boiler room” scams.

This type of contact is an increasing occurrence but fortunately the staff at UK Property Finance are fully versed in spotting attempted fraud and know the questions needed to expose the fraudsters. Just as importantly, they know the process to follow when they believe an applicant is being duped into dishonestly obtaining money. Fraudsters are rarely concerned about the financial damage they cause and once their victim is hooked, they will quickly attempt to extract the maximum income possible before supplies dry up or the victim becomes suspicious. Fraudsters also make additional money by trading victims’ details with other fraudsters.

Once the liquid cash is exhausted, fraudsters will look for other assets to exploit. This is when they attempt to involve UK Property Finance because if a victim owns property, this could potentially provide an additional source of income for the fraudsters to drain. It is a priority to always keep one step ahead of the fraudsters as they are constantly updated with acceptable lending practices themselves. Once armed with this knowledge, they quickly coach victims in the best ways of obtaining borrowing. When lenders and brokers become aware of one scam, fraudsters quickly invent other acceptable stories and so the cycle continues.

Due to UK Property Finance’s top Google positioning for numerous property finance phrases, the company receives approximately 50% of its current business online. With the subsequent volumes, fraudulent activity is potentially a more regular occurrence for online brokerages than it would be for those using more traditional lead generation practices. For the same reasons however, it also means that the staff at UK Property Finance are more aware of the problem and the company has recently thwarted the following barely believable scam attempts:

Case 1

UK Property Finance were contacted by a very well-spoken English lady who said that she required an urgent loan to help fund her brother’s business venture. The applicant was to use her residential property as security for the loan and as she already had a mortgage in place and had minimal income, the loan would be arranged via second charge bridging. Access to bridging finance is generally not determined by income and is often arranged quicker than other types of finance so it is a regular favourite for fraudsters. Also, due to the reported borrowing reason, the loan fitted into a category that is not regulated by the Financial Conduct Authority (FCA) and as such leaves the applicant with minimal protection if something goes wrong. It also means that some brokers and lenders might use less stringent underwriting to grant a loan.

UK Property Finance processes all cases in the same manner, whether FCA regulated or not and the company’s advisors are required to correctly probe any applicant’s circumstances, whatever the borrowing reason. This applicant was initially reluctant to supply any specific information but eventually, she stated that her brother was drilling for oil on a rig off the coast of Mexico, his drill had broken and he needed money for the repairs and to finish the contract. He would only receive payment when the full contract was complete and once it was, he would repay the bridging loan in full. For various reasons, we doubted the veracity of the story and as such told the applicant that we would need to speak with her brother before moving forward. The applicant said that this was impossible due to time differences between the UK and Mexico but she was told that as UK Property Finance is open for seven days a week and until 9pm on four of those days, this was not an obstacle to us. The applicant then said that we would still be unable to contact her brother as his satellite telephone on the rig was broken. She was clearly being evasive and was told that we would be unable to help further. A few days later, the applicant telephoned our office apologising and said that her brother would be calling UK Property Finance later that day. She told us however not to be deterred by her brothers accent as he was born and raised in Africa whilst her parents had been working on that continent. The brother subsequently called our office. He had a very strong African accent and it was obvious from the beginning that the story was highly improbable and with that we ended the call. We contacted the applicant with our findings and after initial denials, she admitted that she had never actually met the person and he was indeed not her brother but a boyfriend she had been speaking with via an internet chatroom. She said that the real reason for the loan was that her boyfriend needed the money for his sick son’s urgent medical treatment in Nigeria and to pursue a medical negligence claim against the hospital. The applicant already knew that this borrowing reason would be unacceptable to lenders, so she had agreed to proceed with a fake story, formulated by her boyfriend. She was clearly smitten and had decided to provide the funds required which she said would be repaid from the proceeds of the negligence claim. We managed to obtain the name and photographs of her boyfriend and a Google search listed numerous scam warnings. We provided this information to our applicant, who thanked us.

A few days later we received a telephone call from a broker attempting to arrange finance for his client. This client happened to be the same person as mentioned above. She had obviously ignored our findings and was instead ploughing ahead with her search for finance. As she was seeking to raise money secured against her own home, we believe that the eventual outcome of any borrowing would be the unfortunate repossession of her property and potential homelessness should the loan not be repaid on time.

Case 2

A gentleman from Scotland contacted our office after finding the details of UK Property Finance while searching for bridging loans on Google. He said that he was fortunate enough to have been contacted by an exclusive, invitation only investment company and required quick second charge bridging loans secured against his main residence. The money would be used to take advantage of a guaranteed business opportunity which, when successful, would repay the bridging loan and create a handsome profit. The applicant was reluctant to provide exact details of the venture but following investigation it transpired that he wanted to invest in a scheme making speculative agricultural land purchases. The investment company was splitting the land and selling plots to investors such as our applicant on the premise that the value would increase far beyond the investors’ purchase price, following the imminent granting of planning permission which was supposedly a formality due to the investment company’s “contacts in high places”.

The applicant supplied us with the address of the land and following a brief call to the relevant authority we were told that obtaining planning permission on this land would be very difficult. Additionally, as the plots were landlocked, i.e. impossible to access without crossing other privately-owned land, the investment would be virtually worthless. We obtained the company name and searched on Google. For the first three pages, every post highlighted fraudulent activity, including a damning listing by the Financial Conduct Authority (FCA). It was stated that the investment company was buying agricultural land at a pittance, knowing full well that it was unsuitable for development as obtaining planning permission was highly unlikely. The company, masquerading as an exclusive syndicate, was then splitting the land into numerous plots which were sold with large mark-ups and as sure bets to investors who were misled into believing that the receipt of planning permission was inevitable.

We informed the applicant and told him that due to our findings and commitment to responsible lending, we would be unable to arrange finance. The applicant reacted angrily and refused to accept our conclusions. He said that the investment company had told him to expect such comments due to jealousy, etc. He ended the conversation by saying that he had been offered money from many lenders and would get the loan from one of those instead. It subsequently transpired that the applicant had already invested his entire life savings into various land investments recommended by the company and had additionally already defaulted on numerous credit cards and loans taken out to fund further purchases. He had been completely taken in by the company’s story and as it appeared obvious that none of the land purchases were ever likely to be profitable, should the applicant be able to arrange short term development finance elsewhere, secured by a charge against his residential property, then he would be in real danger of putting his own home at risk if unable to repay the loan on time.

Cases 3 & 4

UK Property Finance was approached by an elderly gentleman from Southern Ireland who owned an investment property in South London. He told us that his girlfriend was due an inheritance of 14 million Euros but to release the money she needed to raise £60,000 to pay the tax. Our applicant wanted to help his girlfriend in obtaining the inheritance and as he believed he would also financially benefit, he wanted to secure a bridging loan against his investment property. Being elderly and living outside the UK made acquiring traditional finance such as a mortgage difficult so bridging was the preferred option. His story, however, seemed unlikely so our advisor encouraged the rather reluctant applicant to give additional details. During the subsequent discussions the applicant admitted that he had never actually met his girlfriend and had been communicating with her solely via email after her contact on a dating website. According to the applicant, his girlfriend lived in Malta, his favourite holiday destination and he would be forwarding the money raised, to her. Once the inheritance was received, he would be moving to Malta where they would be spending the rest of their lives together. Our advisor pressed further and we were supplied with the girlfriend’s name and photographs. We entered these into Google and they generated numerous fraudulent posts. We reported the findings to our applicant, telling him that we would be unable to help further due to our own responsible lending mandate. He reluctantly accepted our findings and we hope that he stopped communication with her immediately.

In the same week, UK Property Finance was contacted by a lady who said that she required funding, secured via a charge against her own home, for the payment of tax to release her girlfriend’s multi-million-dollar inheritance. She said that her girlfriend was on a secret mission for the British army in an overseas war zone and therefore could not obtain leave to pay the inheritance herself. An already extended time limit was in place, meaning that if the tax was not paid quickly, then all the inheritance would be lost. The applicant required £40,000 for the tax payment and then the inheritance, which was in Saudi Arabia, the birthplace of her girlfriend, would be released. The story seemed highly suspicious, so our advisor asked additional questions to establish the legitimacy. The applicant surprisingly told us that she had seen the money herself in Saudi Arabia and that she had already visited the country to make sure that it was not a scam. She had apparently seen a pallet piled high with money inside a glass walled room and her Saudi escorts had given her a few dollars from the pallet as proof of the money’s existence. The alarm bells by this time were ringing loudly in the offices of UK Property Finance. Amongst other confessions, the applicant admitted that she had never actually spoken to or met her girlfriend but had seen pictures and chatted online. Due to the highly confidential nature of her girlfriend’s employment, the applicant said that she was unable to supply any of the girlfriend’s information allowing us to check the story, so with this, UK Property Finance declined any further help.

Case 5

We were contacted by a lady requiring a secured loan against her own home as collateral to pay a ransom and secure the release of her boyfriend who had been kidnapped whilst part way through building a hotel in Nigeria. According to our applicant, her boyfriend had Nigerian parents but was born and residing in the UK when he had been headhunted to build the hotel because of his exceptional reputation and success in previous, similar projects. The applicant admitted that she had never met or spoken with the boyfriend but they had started communicating on a dating website whilst he was in Nigeria, prior to his reported kidnap. She had fallen for him and following his release and return to the UK, they planned to take the relationship further. Our advisor obviously questioned the applicant’s story and told her that anything as serious as a kidnap must have been reported in the media. To enable standard Google searches, we asked for the boyfriend’s name and a photograph but with this request the applicant became irate and accused our advisor of being sad and heartless before ending the call.

For most of us, it is hard to comprehend how anyone could have been duped with this type of scam however these seemingly farfetched examples are unfortunately all too real. This is a growing problem and scammers are highly skilled in targeting vulnerable and lonely people to extort the maximum finance possible. Unfortunately, by the time UK Property Finance becomes involved, the damage has often already been done and applicants are being completely controlled by the scammers. This means that we are generally fighting an uphill battle from the beginning. Lenders and brokers are continually evolving their safeguarding procedures as with increasing online abuse in this sector, the battle remains very much ongoing.

UK Property Finance reports its findings to the relevant authorities wherever possible.

Gary Latham

(Managing Director, UK Property Finance)