Posts Tagged ‘Fraud’

If You Have Taken a Payday Loan, Watch Out For Scammers

August 29th, 2011

Beware of payday loan collection scams

The latest disaster, hurricane Irene, will cause yet another national expense and will no doubt lead to new and unexpected financial hardships in some areas. As it is, many of us in this tight economy are living from paycheck to paycheck. Payday loans can be a helping hand for people living close to their means when unforeseen expenses occur. As usual the scammers are out there, circling like vultures and ready to take advantage of those already financially stressed people with threatening phone calls, trying to bully them into paying non-existent debts.

Lenders are bound by laws

Legitimate payday loan companies offer small, short-term loans for people who wish to borrow against their next paycheck. However, when collection becomes an issue, these lenders are bound by laws. They are not allowed to harass their debtors, nor can they threaten arrest or jail.

Scammers

In February, Maria Brown of Houston, Texas, contacted authorities reporting scammers. “They contacted me and really had me believe I was going to jail for check fraud,” Brown said. She had taken out payday loans before the calls, and the scammers seemed to have access to those applications. They sounded legitimate because of the information they possessed about her. Brown realized she was being scammed.

Warnings

Consumeraffairs.com warns of a North Carolina caller described as “having a thick accent” who has been harassing North Carolina consumers for “a couple of years now.” The man uses abusive language and threats to frighten consumers into paying phantom debts with their credit cards. Arizona’s Attorney General’s office reported a similar scam in May. Callers claimed to be from fictitious law firms or government agencies and threatened legal action if the victims didn’t pay money owed on payday loans.

Watch out for these companies

Scammers claim they represent real companies that they are not actually affiliated with, or they may use fictitious company names. Beware of callers who say they represent Morgan & Associates, Federal Bureau of Investigators, DNR Recovery, DNI Recovery, Legal Accounts Association, Department of Law and Enforcement, Cash or ACS.

Fair Debt Collection Practices Act

According to the Fair Debt Collection Practices Act, debt collectors are not allowed to threaten arrest if you can’t pay. There is no law in the U.S. that allows arrest for unpaid loans. Collectors are also not allowed to harass, annoy or threaten any kind of violence. It is also a crime to falsely represent oneself as a lawyer.

What to do if targeted

Consumers who receive these calls should never verify personal information over the telephone. Ask for written proof of the debt, which is something legitimate collectors are required to supply. Suspicious consumers may also wish to check their credit report to be sure there have been no unauthorized credit card purchases or loans taken out in their name. Report any suspicious or threatening calls to the Federal Trade Commission, the Better Business Bureau and your state Attorney General’s office.

Tags: debt collectors, Debts, Fraud, Payday Loans, Repayments
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