Payday Loan Scams Flourish as Access to Consumer Credit Slows
As the economy struggles and banks and creditors tighten their belts, many Americans are caught in a precarious situation of not being able to make ends meet until their next paycheck.
It therefore comes as no surprise that cash-advance lenders are now using the lack of consumer credit to their advantage. With credit cards maxed or canceled, and personal loans nearly impossible to come by, many consumers are looking to their short-term cash solutions, which is where cash advance loans, often referred to as payday loans, come into play.
Although most cash advance lenders are reputable, there are a few that are looking to scam consumers and make a quick buck.
If you do not have access to cash or credit, and you are in a financial bind, you may look to cash advance loans for your short-term cash flow problems. From a broken down vehicle to an overdue gas bill, millions of Americans use payday loans ever year.
However, it is important to understand that all payday loans are not created equal, and that you should be aware of some of the signs of a possible payday loan scam:
- The online payday loan company does not have a mailing address or telephone number. Many scams do not have solid mailing address and telephones, thereby making the process of finding them much more difficult.
- The payday lender solicits you by phone, as payday lenders are prohibited from doing this under the Federal Trade Commission laws. Never respond to any type of solicitation over the phone, and certainly never provide them with your personal information.
- The payday lender asks that you wire money to them before you can receive your payday loan. A payday loan should never cost you any upfront money, so if a payday lender is requesting upfront money, move on.
- The payday lender asks for your personal information over the phone or Internet and the Internet connection is not secure. Many online payday lenders feature easy, online applications; but make sure the Internet connection is safe – and that the lender is someone you know – before providing any information.
- The payday lender is located outside of the country.
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