Online Payday Loan Scams
Cashed strapped consumers are desperate to find ways to make financial ends meet and many unscrupulous businesses are coming out of the woodwork to take advantage of this. We’ve all seen the ads for payday loans. What could be easier than signing up online, giving your bank information and having money directly deposited in to your bank account? Unfortunately, some Americans are finding out many of these online payday loan companies are tacking on outrageous interest fees. How can consumers protect themselves?
Complaints against online payday loan companies on the increase
In recent months, the Better Business Bureau has received numerous consumer complaints against some deceitful online payday lenders. Many consumers are reporting to the BBB that their $200 loans ended up costing them well over $1,000. Some of these online companies charge unbelievably high interest rates, making it almost impossible to pay anything towards the loan principle. Unlike a payday loan from a local business, online payday loans require a borrower’s bank account information. The borrower is then at the mercy of the lender while more money than was ever expected is automatically withdrawn from the account.
A lack of accountability
When consumers complained directly to these fraudulent payday loan companies they learned they weren’t even licensed. These lenders simply told consumers they don’t have to follow state or federal laws, often stating that they’re based outside the U.S. Some even declare themselves to be on Native American reservations, making them sovereign nations. Recently, in West Virginia, the State Attorney General’s Office investigated just such a claim only to find evidence that lenders declaring Native American sovereignty were not actual nation members at all, but were merely “renting” it for purposes of claiming exemption from state and federal laws.
Do your research before giving any bank information
Unfortunately, many of these online lenders are difficult to track down, making it difficult to hold them accountable. Being a savvy consumer is your best defense. The Better Business Bureau warns consumers not to give any bank information for the purpose of receiving a payday loan without doing some research beforehand. Go to your own bank first to see what loan options are available. If you don’t qualify for a traditional bank loan and feel your only choice is an online payday loan look for obvious red flags. If an online lender won’t give their physical location or any contact information, or they if don’t perform any type of background check and only ask for your bank information you should steer clear of them. You should also check a business’s background on the BBB as well.
Report scammers right away
If you feel you’ve been a victim of one of these deceitful online companies you should file a complaint with the BBB, contact the Federal Trade Commission, your State Attorney General’s Office and visit Fraud.org.
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