Scam Targets Borrowers of Payday Loans

[Aug 10, 2009.]

 

The Better Business Bureau (BBB) has issued a warning about phony debt collectors harassing people about payday loans. The callers claim that people have defaulted on payday loans and threaten them with jail time unless they pay up. Here's what to know about this latest scam and how to avoid becoming a victim.

No Credit Check Loans

Many people who are struggling financially turn to no credit check loans from payday lenders to help pay bills in between paychecks. Borrowers write a check against the loan, which will be cashed on their payday. If they can't pay back the loan, they can either roll it over into another high interest loan or end up defaulting on it.

Victims Threatened by Fake Organizations

The current scam involves callers who claim to be lawyers with the "“Financial Accountability Association” or the “Federal Legislation of Unsecured Loans,” neither of which is a legitimate organization. They threaten to have the person arrested unless he or she pays as much as $1,000 by wire or by giving bank account or credit card numbers. They also threaten to have the person extradited to California within the hour to stand trial. Some of the calls have originated from the following phone numbers: 949-468-5107, 415-200-0274, 415-200-0274, 213-784-5745, and 408-715-1614.

Scammers Have Access to Personal Information

Various types of phone scams have been around for a long time, but in this case the callers seem to have a lot of personal information about consumers, which may make the calls seem more credible to people. In some cases, scammers have had numbers for the victim's Social Security card, old bank accounts, and driver's license. They also have had employment information, old addresses, and names of family and friends. 

“Because the scammers have so much information about potential victims, BBB is concerned that this may be the result of a data breach,” said Steve Cox, spokesperson for the BBB.

Consumers Need to Protect Themselves

So what should people do if they receive a call from a person claiming to be a debt collector?  They should:

—Ask for official documentation of the alleged debt

—Avoid providing any personal information over the phone until they know that they are dealing with a legitimate company.

—Avoid calling numbers provided by the unknown caller and only use phone numbers listed in their monthly statements or in their creditor's terms of agreement

File a Complaint

Anyone who is being targeted by a loan scam can contact the BBB to file a complaint. They can also file a complaint with the Federal Trade Commission.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.