AAPL can help you identify scammers and offers important tips for curtailing their activity.

“Hello, you’ve reached the American Association of Private Lenders. How can I help you?”

“Hi, I don’t know if I’m calling the right place, but I found you online and was wondering if you could help me. I wanted to check whether this lender is legitimate.”

“We don’t know every lender out there, but if they’re one of our members or we know of them, we can definitely help with that.”

“OK, it’s ABC Company.”

“It looks like ABC Company is one of our members, so that’s good. But there are scammers who will pretend to be a legitimate private lending company. Can you tell me what email, phone or website they gave you?”

“555-555-5555 and info@abc-companyllc.com.”

“That’s not the information we have on file for them, but they could have changed things. Just to be safe, let me give you the contact information we have. Call to see if you’re talking to the same person. If not, the people you were talking to before are scammers.”

“OK, let me grab a pen.”

So, What Was That About?
At AAPL, this conversation plays out on a near-daily basis. Sometimes the lender isn’t a member, so we tell the borrower how to complete due diligence. We recommend finding a lender in our member directory instead if things feel even a little off-key.

The most painful conversations happen when the borrower has already sent an “application fee” or “small down payment” to the “lender.” We can only direct them to their state Consumer Protection Office and the Federal Trade Commission’s online complaint form. We also recommend they file a report with their local police department.

And, if the scammer is using the identity of a real lender to perpetuate fraud, we let the lender know so they can work with authorities from that angle.

Over the years, our watchdog role has saved borrowers untold financial difficulty and headache, especially since stealing money is often just the first step. A scammer will keep the borrower on the hook until they have all the sensitive information that makes up a mortgage loan—and the borrower’s identity, lock stock and barrel.

With every scam we help block, we are building goodwill for our industry and making it just a little less lucrative for scammers to continue their illegal activities. Borrowers trust us because we have no stake in the outcome of their loan.

Picking up a ringing phone is priority at the AAPL offices. Odds are it’s a borrower looking for a lender or checking up on one. If we don’t pick up, we’re leaving the door open for shady operators to step in.

The only easy way a borrower can check up on a private lender is by talking to AAPL. For our largely unregulated industry, there is no state or federally regulated government agency that tracks and licenses private lenders because most private lenders do not lend to consumers. The scammers, on the other hand, don’t care about those considerations. They’ll go after any John or Jane Doe, using lenders’ established good name and reputation for their own ill-gotten gain.

The worst part? Unless the borrower contacts us or finds the real private lender down the road (which seldom happens because the borrower walks away thinking they were scammed by a real private lender), we are unlikely to know to act. Most victims will not report what happened to the applicable government agency due to shame, lack of knowledge about how to go about it, or assumptions that law enforcement can’t help them gain recompense.

So, while it is a bit outside the scope of a typical trade association to help borrowers safeguard against scammers, it is one of AAPL’s unsung services that has helped lift the industry’s reputation for the past decade. When borrowers trust us as the stand-in for institutional regulation, that trust also extends to our members (another reason we are so gung-ho on our Code of Ethics)!

While it’s a top-down stopgap that we are proud to fill, lenders can help—and it’s in your own best interests to do so. Borrowers who trust that you’re looking out for them are more willing to do business with you. You can bet scammers never tell their victims how to be on the lookout for fraud.

In Private Lender’s Winter 2020 issue, Marty Coyne noted in his article “Lenders to Face More Technology-Driven Challenges in 2020,” that according to the BBB Institute for Marketplace Trust and the Stanford Center on Longevity (bbb.org/ExposedToScams), when consumers have heard of a scam method, they are much less likely to fall for it.

What Can You Do to Subvert Scammers?
Here are a few things you can do:

Educate borrowers about lender due diligence // Include tips about how to practice lender due diligence as a regular part of your communication with borrowers. We’ve provided some starter information on page 32. Please be sure to attribute anything you use to AAPL. For easy distribution, download PDFs about due diligence and lending fraud victim recovery at aaplonline.com/directory.

Educate borrowers about common mortgage scams // Post articles about common types of scams associated with the private lending industry. Some of the most common scams (for our industry) include:

• Pretending to be a private lender to ask for large down payments or upfronts fees, or to fill out mortgage applications to steal the borrower’s identity.
• Stealing the identities of real private lenders (like you!), including spoofing their websites.
• Foreclosure rescue services or mortgage relief scams that promise to lower payments or change the loan terms in exchange for a fee or providing borrower’s sensitive information “to get the process started.”

Make it easy for borrowers to check up on you // Include the AAPL member emblem in your email signature and on your website with links back to aaplonline.com so borrowers can easily verify your status with us. For scammers who spoof entire websites without checking the details (or who keep it to make themselves seem more legitimate, assuming borrowers won’t check or that we don’t provide the watchdog service we do), using the member emblem makes it easy for borrowers to uncover the fraud.

Download the member emblem by logging into your AAPL member account and going to aaplonline.com/dashboard.

We’ll leave you with this testimonial from one of the many people for whom we’ve picked up the phone:

“I would like to thank the American Association of Private Lenders and Linda Hyde for help in ensuring I was actually working with a reputable lender. I had been working with a lender for almost a week and was planning on signing and sending almost $5,000 in closing costs, until I reached out to Linda.

“She told me that this company was a member but warned that someone else had been portraying themselves as this lender and was scamming people. She gave me specific information that not only allowed me to check the validity of this scam artist but got me to the actual lender. I was able to start a business relationship with the true lender! Without Linda and AAPL, I would have been another scam victim. Thank you, Linda! Your speedy and helpful response ensured that I wasn’t taken for 5K and I met a great lending partner!”

David Kelly