Knox County woman falls victim to consolidation loan scam

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KNOXVILLE, Tenn. – A Knox County woman is sorry she ever answered a text message from a scammer offering to consolidate her debt.

Scammers are constantly on the lookout for people who search the internet for loans. The con artists know that they may be able to hook someone into their trap with fake sincerity and kind words.

It was late November when Debra Dougherty searched the internet for a loan company that might help consolidate her mounting debts. Dougherty said she needed a consolidation loan of $10,000 to help ease the burden of credit card and personal debts. Within a day, Dougherty received a text message. She was in luck, or so she believed.

"I got a text from Advance America is what they gentleman said he was. Yes, Advance America,"
said Dougherty.

Advance America says arrange installment loans to qualified customers, not consolidation loans. Dougherty didn't know that and didn't realize what was about to happen.

"He said I was approved for the loan on the text. So I was okay good I'll call him and find out what the details are,"
she said.

Dougherty says the man asked for more information so he could run a credit check - things like her banking account numbers, passwords and her Social Security numbers.

Once the scammer convinced her to disclose everything that's confidential, he still wasn't through. Now he wanted Doughtery's money. Knowing her bank numbers, he deposited nearly a thousand dollars into her account to boost her credit. But he called again with bad news.

"He tells me that my credit score isn't high enough to get the loan,"
said Dougherty.

So, a second check was sent to her account to boost her score. Then, Dougherty was told a "Paco Verbitski" with the Federal Trade Commission required nearly $600 to adjust her score.

"He tells me to wire the money. So I end up going to Walmart,"
she said.

She bought a Moneygram from Walmart and sent the money. To further disguise the scam, Dougherty was given confirmation of the deal - a contract from Cash USA, not Advance America.

Advance America, a legal provider of payday loans and other financial services, issued a warning that there's "been a wave of scams targeting consumers regarding consolidation loans throughout the country."

"Okay, I've closed out my checking account. I put a fraud alert on my credit cards and a fraud alert on my credit reporting agencies,"
said Dougherty.

Dougherty is out $600, but it could have been more.

"I should have checked into it a little further. I really messed up. Instead of helping, it made it harder. Because I lost money, you know,"
said Dougherty.

We warned you about troublesome debt consolidation loans with companies that combine your unsecured debts into one monthly bill with an illusion of a lower interest rate. Debt consolidation is a refinanced loan with extended repayment terms, and extended terms mean you'll be in debt longer.

A lower interest rate is not always a guarantee when you consolidate, and debt consolidation does not mean debt elimination.