Payday loans can give you financial assistance when you need it the most. Still, some lenders will take advantage of this weakness by giving borrowers rapid and straightforward access to money that appears too good to be true—unfortunately, this is frequently the case.
Here’s a recent example of Payday loan fraud. If you get careless, you can reveal vital information to a con artist or fall for a trap, and you might not get the loan promised.
Visit the company’s website or contact your state’s attorney general to learn if they are a licensed lender.
How to Spot a Payday Loan Scam
There are several indicators that you might be the victim of a payday loan scam:
- Upfront fees: Legitimate Payday lending companies do not impose upfront fees on their loans. Before making a loan, a lender should never request payment. This is a sign of a scam.
- Debt collection: The fraudster contacts you via email, mail, or phone, pretending to be a debt collector. The con artist then demands payment or claims a prior transaction failed. If you don’t send money or divulge a bank statement or credit card information to settle the bill, the con artist will threaten to file a lawsuit against you.
- Interest rates: Even though the interest rates on payday loans are often high, if a lender offers rates that seem too good to be true, it can be a scam.
- Requests for sensitive information (Phishing): Scammers could request delicate personal or financial data from you, including your social security number or bank account details.
- Uncertain terms: If the lender’s terms and circumstances are unclear, it could be a scam. Before accepting any loan, make sure you understand all of its terms.
- Unprofessional conduct: A scam may be underway if a lender is harsh, combative, or unprofessional. Trust your gut and use caution when conducting business with an individual who does not appreciate you.
If you believe you are the victim of a payday loan scam, you should report it to the relevant authorities, like the Federal Trade Commission (FTC) in the United States.
Beware of Scam Debt Collectors
Scam debt collectors have been known to attempt to collect on payday loan debt. If you receive a collection call for a loan, you have yet to apply for; it can be a payday lending scam.
It is essential to thoroughly verify if you took the loan because scammers occasionally pose as collectors for a loan that you might have applied for but ultimately declined. If you did obtain a payday loan, confirm that the collector is trustworthy and comes from the right lender.
How to Make Sure Your Payday Loan Is Safe
Verifying that the company has the appropriate licenses is the first and simplest thing you can do when evaluating a payday loan offer. Payday lenders are subject to heavy restrictions and need a valid license.
You might feel more secure knowing that licensed lenders must abide by strict state and federal laws. Visit a company’s website to learn if they have a license. You can confirm this information by contacting your state’s attorney general if they mention getting a license. You risk falling victim to fraud if the lender lacks a valid license.
What Can You Do if You Fell for a Payday Loan Scam
The Federal Trade Commission (FTC), the organization in charge of collecting spam reports, can be contacted if you have been scammed. You can either call 911 or file a report with the FTC. Call them at 1-877-382-4357 or visit this website for additional details.
Expect to share further details with authorities to support their case so that they can investigate the scam and, if they discover who it is, bring charges against them. In some cases, it may be impossible to get your money back because the person who stole it is in jail, and the victims only get their money back after a lengthy legal process.
- Research any lender’s reputation and business procedures before borrowing money from them. Look up ratings and reviews online, and steer clear of lenders with a preponderance of unfavorable comments.
- Before accepting any loan, carefully read the terms and conditions. Make sure you are entirely aware of the terms of repayment, such as the interest rate, fees, and additional costs.
- Payday lending companies that are legitimate do not impose upfront fees on their loans. Before making a loan, a lender should never request payment. This is a sign of a scam.
- Lenders need help to ensure loan acceptance. A lender is probably lying if they say they can guarantee approval.
- Scammers could request delicate personal or financial data from you, including your social security number or bank account details. Do not send this information if you are not convinced that you are working with an authorized lender.
- A lender may be a victim of fraud if their offer looks too good to be true or if they act aggressively or in an unprofessional manner.