While payday loans can help to provide you with access to cash when you need it most, certain “providers” will exploit this vulnerability, blinding borrowers with quick and easy access to cash that seems to good to be true – this often, unfortunately, being the case.
In this guide, we’ll help you work out whether your payday loan offer is a scam. We’ll also go through what to do if you have fallen for a payday loan scam.
Check if Your Payday Loan Is Safe
The first and easiest check you can do on a loan offer is to make sure that the business is properly licensed. Payday lenders are held to strict laws and must have a proper liscense.
Licensed lenders must follow stringent state and federal laws, so you know you are better protected from fraud. To find out if a business is licensed, check their website. If they mention their license, you can verify this information by contacting your state’s attorney general. If the lender does not have a legitimate license, you may be at risk of fraud from scam businesses.
How to Tell if a Payday Loan Offer Is a Scam
If payday loans are not legal in your state, the loan offer could be a scam. If you see a payday loan advertised in a state where it is prohibited, this should be an immediate warning.
Red Flags to watch out for:
- Scam payday loan advertisements.
- Scam payday loan offers.
- Scam debt collectors.
If payday loans are not legal in your state, this means that any advertisements you see are not from licensed and safe lenders. If you are offered a payday loan, this may be a payday loan scam.
Scam Debt Collectors
Scam debt collectors have also been known to try to make collections on payday loan debt. If you are contacted for collections on a loan that you didn’t take out, this may be a payday loan scam.
Scam artists will sometimes pretend to be a collector for a loan that you may have applied for but didn’t end up accepting, so it is essential to check carefully if you did in fact take the loan. If you did take out a payday loan, make sure that the collector is reputable and from the correct lender that you borrowed with.
Recognising Scam Artists
Part of being able to recognise when you are being targeted by a scam is knowing how a typical scam works.
A common method for scammers to use goes as follows: The scammer contacts you by text, phone or email. The scammer claims to be a payday loan collector. The fraudulent collector then declares that you failed to repay a payday loan and demands that you make a repayment. The scammer insists that you’ll be sued if you don’t immediately transfer a payment, provide a bank account or credit card number to pay off the debt.
Remember, the scammer may have personal information about you, and could even know about a loan you applied for previously, but this does not make them legitimate!
What to Do if You Fall for a Payday Loan Scam
If you think you may have been a victim of a payday loan scam, you should contact the police and your state attorney general to find out how to proceed.