Because we recently added our non-profit, peer-to-peer (p2p) lending service, Page (the Administrator/Operator/Moderator) has asked me to make some noise on the main CLF blog here to alert as many people as possible of the possible online money order scams.

So I had to do some research on these loan scams so I could understand exactly how it works. Basically the people that perpetuate these loan scams are seriously disconnected from this universe. Lost souls – you know…..criminals. I don’t want to waste allot of time ranting on about these people…I just want to warn people so they can avoid being duped out of their money.

What we did at CLF was pretend to be looking for a loan, and went through the process of asking for a loan from one of these Nigerian based scam lenders. It was fun to waste the time of these people. We asked lots of questions, and drove them crazy keeping them hanging on. Essentially we played a con on the con artists. We had them send money orders, then claim we didn’t get them three times, and of course at the last minute we didn’t send them their processing fee, interest, or insurance.

We burnt their money orders (which all bounce if you ever try to deposit them in your bank account) in our fire place during our morning coffee and orange juice. We wasted many hours of their days – loved every minute of it.

Why I’m Calling This The Nigerian Loan Scam

First of all, I’m calling this the “Nigerian Loan Scam” only because it’s a simple plain fact that the most aggressive criminals online are using Internet IPs that are located in Nigeria. At CLF we know from our experience that 99% of the loan scam artists that try to post their emails on our domain (californialoanfind.com) are doing so from a Nigerian IP. We have been punting these people from our comments and pages ever since we launched back in late 2008. So, it’s that the Nigerian people are corrupt criminals (of course) – it’s just there is a group of people in that country that have decided to scam the world out of their hard earned money.

How The Nigerian Loan Scam Plays Out – Order of the Con

1. The Hook – the scam artists float emails addresses around the Internet on forums, blogs, pages, posts, etc. They often have a fake story of a borrower in the United States that was desperate for a loan, and found the answer to their prayers when they used this wonderful loan provider that offers “bad credit personal loans at a 2% interest rate”. Then they drop in their email (which changes often). The poor, unaware applicant takes the bait and emails the scum scam artist.
2. The Play – the scam artist sends the pigeon (borrower) an email asking for the amount of the money they want to borrower, what for, their address, name etc. Then the scammers send back the information regarding the terms of the loan, including how much interest they are going to pay etc. Once the borrower agrees to the terms, the phony lender send the unsuspecting borrower a money order for the amount of the loan.
3. The Close – When the borrower gets the money order in the mail they see the check for money and get excited, and this is where the scam actually works, regardless of all the common sense thoughts that running around in the back of the borrowers mind. Included in the same mailer that has the money order comes information telling the borrower that they have to pay insurance, processing fee(s), and/or interest on the loan. Some of the scams are different and some are more or less aggressive, requesting  just a processing fee, or just the insurance – whatever…..it’s doesn’t matter because the money order is FAKE and ALWAYS bounces when deposited.

How to Avoid Any Kind of Loan Scam from ANY Country of Origin

Simple. NEVER pay a cent to the lender until you have cashed their check or had the money transferred into your bank account from whatever method of money transfer used. NEVER, NEVER, NEVER. As soon as the lender asks for a red cent before you have the money in your account RUN for the hills! Fast. Then if you want to, PLEASE report them, their email, their phony name(s) (everything on them), here in our reporting area.

It’s that simple friends. The risk factor in the lending industry is ALWAYS with the lender. It’s part of the business for lending and this is why borrowers who have bad credit scores have to pay a higher interest rate on their loans. The lender knows that there may be a risk the borrower/applicant might default on their payments and the loan agreement.

Using our personal messaging area with the use of Skype video and file attachments for documents, the lender has to be comfortable with you as a borrower, and you have to have a credit check completed (hopefully for free), before the private lender will approve the loan.

People borrow money privately all the time, and the peer-to-peer lending world now online has about a 95% success rate – why? Because the overwhelming vast majority of humans on this planet are honest.

Why We Block Certain Countries from CLF and Our Peer-To-Peer Lending Area (Nigeria Included)

At CLF we don’t like excluding anyone, but we have been forced to for the protection of our users. So we now block some countries all together from our domain – period. For example, Ip addresses from Nigerian and Proxy IP addresses are blocked all together.

• In Other News – Read about Microfinance or Microlending at the Huff