HASTINGS, Neb. (KSNB) – Scammers are evolving their ways of attacking the bank accounts of hard-working Americans and payday loans are the latest avenue. These types of loans target people who need a quick fix or something to get by until their next payday.
The BBB says the scammers pose as payday loan companies or debt collectors and have affected more than 200,000 people, costing them around $4.1 million. Experts say victims generally feel like this is the only option available to them.
“What’s really devastating with these particular scams is that they pull people out of the fringes. These are people who are generally in desperate need of money and with a very short deadline to work, and because of this they are willing to ignore many of the red flags we mention in the scam study” , said Josh Planos, Vice President of Communications and Public Relations for the Better Business Bureau.
The playbook is not much different from other types of scams and payday loans have a wide cross section; but they target a certain crowd of consumers.
“Mostly middle-aged. Kids and teens usually don’t look for payday loans, but it kind of depends on the type of scam due to debt collection. We send out news releases all the time about scholarships, student debt,” Planos said.
From 2019 to July 2022, BBB received nearly 3,000 customer complaints about payday loan companies, with a disputed dollar amount of nearly $3 million. In addition, over 117,000 complaints have been filed against debt collection companies at BBB. Complainants often said they felt ill-informed about the terms of their loans. Many fall into what consumer advocates call a “debt trap” of racking up interest and fees that can force customers to pay double the amount originally borrowed.
“They come to these places because they desperately need a solution and have exhausted all their other options. So what’s particularly notorious about these types of scams is that they target people who are already on the fringes, who have already lost their chance,” Planos said.
Consumers are advised to look for the signs, before the scammers trick them into putting them in a compromising position.
“The reality is that your life may never be the same again. I hate to say it in such crude terms, but it really is something that threatens your future purchasing power, your credit score absolutely, your ability to pay for everything.
Regulators at the federal level have pursued tougher laws to curb predatory lending, but those regulations have been rolled back in recent years, leaving states to set their own rules on interest rate caps and other aspects of mortgage lending. salary.
This varies from state to state, so the process for people going to these payday loan companies varies.
The BBB has recommendations for regulators:
- Cap consumer loans at 36%
- Educate more people about no-cost extended repayment plans
- Require lenders to test whether consumers can repay their loans
- Require Zelle, Venmo, and other payment services to offer refunds for fraud
Where to report a payday loan scam or file a complaint:
- Federal Trade Commission (FTC) – ReportFraud.ftc.gov
- Canadian Anti-Fraud Center (CAFC) – Online or by phone at 1-888-495-8501
- State attorneys general can often help. Find your state attorney general’s website to see if you can file online.
- If you have an overdue payment on a payday loan, the Consumer Financial Protection Bureau may have resources to help you establish a payment plan.
Experts say some victims of the scam are still struggling to pay their bills and put food on the table. They also urge anyone who is going to apply for a payday loan to make sure that this company is accredited.
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