Scheme 1. “Guardians”
A troubling fraud pattern has surfaced where illegal lenders pose as custodians and offer consumer loans under the guise of warehousing services. Borrowers are asked to leave an item for storage after paying a security deposit. After a set period, such as 30 days, they are directed to retrieve the item, make the loan payment, and cover a storage fee that doubles as the cost of using the money.
These so-called custodians present themselves as legitimate operators, even signing storage agreements. Yet this is a scam: the loan is secured by the property, the deposit equals the loan amount, the item acts as collateral, and the storage fee functions as interest on the funds tied up in the deal, according to Anton Saikin, head of anti-money-lending efforts at the central banking authority for the Central Federal District.
The expert noted indicators of illegal lending that can breach contract terms, yield far less than the item’s true value, and lead to forced sale of collateral. Examples of firms linked to this pattern include Yuvelia + LLC and Gelyuta LLC. Some illegal lenders may even employ coercive collection methods, sometimes described as brutal tactics.
Scheme 2. Loans in social networks
Online chatter from illicit lenders now extends far beyond simple websites; more than 42% of their promotions appear on social networks, with activity rising quickly. Where once the fraudsters relied on denial sites for quick online loans, they have expanded to multiple social pages and channels on messaging platforms.
Some individuals advertise loans funded from their own pockets via personal profiles or online groups. While this may seem cheap, offering ongoing loans through this method is treated as a professional financial activity that individuals lack the legal right to perform.
“A private loan to a friend for a one-time deal with interest might be permissible, but continuously issuing loans and seeking clients through social networks without proper licensing is illegal,” Saikin emphasized.
Since February of the prior year, the central bank has begun blocking online pages that spread information about illegal services. The restriction process mirrors other fraud sites and involves cooperation with the prosecutor’s office and the national regulator. The process can take several days to complete.
Scheme 3. Loans from individuals
To sidestep the law, some groups spread funds through a network of collaborators rather than a single lender, with different lenders chosen for each borrower and property kept secure in separate arrangements. “Legally, such transactions fall under individual civil-law relations, making them hard to challenge in court,” Saikin explained. For businesses, loans must come from organizations registered with the central bank or licensed to issue consumer credit; a borrower dealing with an illegal entity can contest the agreement in court.
“Yet this does not apply to deals among individuals. The danger is that illegal creditors aim not only to profit from interest but also to push the debtor toward default. Once in default, thieves may seize property and sell the collateral, such as an apartment or a car.” Saikin noted.
Scheme 4. Commission stores under the guise of pawnshops
Legitimate pawnshops operate under federal law, and their formal name must include the word “pawnshop.” The Bank of Russia supervises these entities.
“There are dishonest brokers who mislead clients by posing as pawnshops. A borrower who approaches such a firm may believe they are dealing with a pawnshop. They hand over an item, receive cash, and expect to reclaim it later. Yet on paper the deal looks like a transfer of property to the shop for an upfront sale,” described a central-bank representative.
The reality is that some loan arrangements end up costing the client more through higher interest or loss of property because the item may be sold before the loan is repaid.
Examples of activity in this area include Lombard 911, Nofelet 33, and Boomerang second-hand stores.
Scheme 5. Leaseback
The leaseback trick often appears in car financing, with ads describing loans secured by a vehicle’s technical passport. Saikin notes that a leaseback plan is not illegal when used for business purposes and meeting certain requirements. But illicit lenders hide behind this model to offer consumer loans to individuals.
The risk lies in the possibility of steep interest, penalties, forged documents, and outright seizure of property. Under a leaseback, the car is sold to the lender while the borrower continues to use it as a lessee, which can trap the debtor in a cycle of missed payments and eventual loss of the vehicle. Organizations flagged for this activity include Promo Finance LLC, Trust-Avto-Group LLC, and Phoenix Leasing MSK LLC.
Only licensed financial institutions or those listed in government records can issue consumer loans. Consumers should verify a company on the official registry. If a company does not appear, it is wise to seek another creditor, Saikin advised.
To curb illegal activity, the regulator reports confirmed cases to the police, the prosecutor’s office, and the antimonopoly service. In the first half of 2023, about 70 criminal cases and more than 300 administrative cases were opened for violations in the illegal financial market, with hundreds more interventions and thousands of unlawful internet sources blocked through the regulator’s effort.
Attribution: Central Bank expert statements and regulatory actions summarized for public awareness and safety in consumer finance.