Payday Loan Scam

This new twist on an already “iffy” practice can steal your identity and your money.

Who Is It Targeting: Consumers in need of fast, short-term loans

What Is It: A con involving payday loans

What Are They After: A lot of working people find themselves in need of some quick money, especially if they don’t have savings or their credit isn’t in the best shape. A massive car repair, an unexpected health issue, or any other immediate need can send people in search of a payday loan. Consumer advocates have warned that payday loans end up being very, very costly due to the high-interest rates, but this scam comes at an even higher cost.

When you apply for a payday loan, the scammers tell you there’s an issue with your account that will prevent it from going through. In one case, the victim was actually told her identity had been stolen (it hadn’t, but it was about to be). The company offered to clear up the identity theft issue for her in exchange for a hefty fee, but of course, they had to have all of her personal information and bank account numbers in order to do so. She was already low on cash in the first place, and the scammers helped themselves to what she had left.

How Can You Avoid It:

• The best thing to do is never find yourself in need of a payday loan; building good credit and routinely setting aside a little money for emergencies is best.
• If you do need an immediate loan, seek out a reputable company and make sure your personal information is secure.
• There are lots of different scams involving payday loans, including some that threaten you with arrest for not paying fees or other charges. Be aware of the scams before you sign up so you can avoid them.

If you think you may be a victim of identity theft, contact the Identity Theft Resource Center for toll-free, no-cost assistance at (888) 400-5530. Find more information about current scams and alerts here.

For full details of this scam check out this article from National Consumer League.