Payday loans offer borrowers access to fast cash to help them stay financially afloat until they receive their next paycheck. While payday loan providers can help you get funds when you need it the most, it is important to be vary of scammers who take advantage of those who need to borrow money urgently.
Sometimes if a deal seems too good to be true, then this may be the case and it is important to be wary of fraudsters. This guide will delve into further detail on how to spot a payday loan scam and what to do if you have been conned by a fraudster.
What Is A Payday Loan?
Payday loans are a short-term financial product that enables borrowers to get access to quick cash for financial emergencies such as having to pay for an unexpected medical bill, car repair or rent. Those who cannot wait until their next payday can use this influx of money to pay for their important expense, before repaying back their loan when they receive their next paycheck.
How Can I Tell If A Payday Loan Offer Is A Scam?
Unlicensed Payday Loans
There are key warning signs to look out for to help recognise a scam. This can come in the form of a scam payday loan advertisement or offer.
It is essential to check that the lender has a license by checking their website or contacting your state’s attorney general. Payday lenders are required to follow strict regulations and must have a proper license, so if the lender does not have a legitimate license you may be at risk of being scammed.
Scam Debt Collector
If you are contacted for collections on a loan that you did not take out, this will most likely be a payday loan scam. Likewise, scam artists can pretend to be a collector for a loan that you may have applied for but did not end up accepting, so it is essential to check carefully if you did in fact take the loan.
If you have taken out a loan and believe you are meeting your repayments on time, look out for a fraudulent debt collector who may declare that you have failed to meet repayments on your payday loan and demand money. You may receive a text, phone call or email from someone claiming to be a payday loan collector; however, it may not be from the actual lender. The message may even threaten a lawsuit if you do not immediately send over the funds. If this seems suspicious to you and does not add up, then contact the lender you signed the contract with to confirm whether or not it is legit.
Often fraudsters gain access to your personal information or know about your loan history, so do not assume just because they are aware of key data, that they are legit. Scammers can be very deceiving so it is important to be vigilant and always double check if you are suspicious. Make sure that the collector is reputable and that all correspondence is from the lender that you borrowed money with.
What Should I Do If I Fell For A Payday Loan Scam?
If you think you may have been a victim of a payday loan scam, then you should get in touch with the police straight away. They will tell you how to proceed and point you in the right direction.
It is also important to report the fraud to the Federal Trade Commission (FTC), so that you can file a complaint. As well as this, you can file a complaint with the Internet Crime Complaint Center (IC3) if the scam was achieved online, and this will be processed by the FBI and National White Collar Crime Center who will refer your issue to the appropriate law enforcement agency for further investigation.
You could also consider submitting a complaint with the Consumer Financial Protection Bureau (CFPB) as this government resource seeks to regulate consumer financial products and enforces existing federal consumer financial laws judiciously. They help to prevent malpractice and try to educate consumers to make informed financial decisions.
It is also worth getting in touch with your credit bureau as the scam may extend into your credit. Since it is possible the scammer will also have your personal details and social security number, you should file a fraud alert to prevent any identity theft. You will then receive a free credit report from the bureau which you can look through to check if there is any fraudulent activity that needs to be disputed.