No up front insurance payments necessary for loans

(TORONTO) March 2, 2004 - A new twist on an old scam has appeared for people trying to obtain loans over the Internet.

In this latest version of the scam, people applying for loans from companies over the Internet are told that the loan has been approved, but they need to take out an insurance policy on the loan. The scammers then ask the people applying for the loan to pay a premium on an insurance policy. Once they pay the premium they never hear from the company again.

"We do everything we can to try and protect consumers, but unfortunately, people will take risks without looking closely at what they are being offered," said Bryan Davies, CEO of the Financial Services Commission of Ontario (FSCO).

"Companies who sell insurance products in Ontario must be licensed in Ontario," added Mr. Davies. "Any legitimate company that makes loans may arrange life and/or disability insurance on the loan and those premiums may be part of the repayment schedule."

Mr. Davies has some simple advice for people seeking loans, where someone is asking for money up front, "Don't do it. It is a scam."

When purchasing any insurance product in Ontario, consumers should check the FSCO web site to ensure the people they are dealing with are licensed to operate in Ontario.

For more information on licensed insurers, visit the FSCO web site at www.fsco.gov.on.ca or phone 1-800-668-0128.

FSCO is a regulatory agency established under the Financial Services Commission of Ontario Act, 1997, and reports to the Minister of Finance. FSCO regulates six financial sectors in Ontario: insurance, credit unions/caisses populaires, mortgage brokers, loan and trust companies, co-operatives and pensions.

For more information please contact
Brian Donlevy
Information Officer
(416) 590-7057
bdonlevy@fsco.gov.on.ca