How to Avoid Falling into Bogus Payday Loan Scams?
Payday loans are short duration loans that are generally issued to individuals with a low credit score. The loans entail a high interest rate and help individuals to meet cash shortfall until the next payday.
The National Consumers League, which is the oldest consumer watchdog in the US, has reported that it has received a large number of complaints regarding bogus payday loan lenders. The fake companies most of which belong to outside the US claim to be legal payday lenders, law enforcement, or loan collection agency, and rob the consumers of their hard earned money.
While efforts are being made to detect and shut down activities of the scammers, the best thing you can do to protect yourself is to take simple precautionary measures to avoid getting cheated of your money by the bogus payday loan lenders.
Tips to Detect and Avoid Fake Payday loan Lenders
Bogus payday loan lenders typically target people that have a low credit score as there is a greater chance that they have availed payday loans. The individuals are called or sent an email telling them to pay their installment amount or face legal consequences.
In some cases, the fake payday loan lenders set up a bogus site offering loans to the consumer at an upfront fee. The upfront fees are said to cover insurance for the loan. But once the individual pays the fee, the promised loan is never dispatched.
Another type of fake payday loan lenders that you should be aware of are those that have not obtained a legal license to operate in the state. These lenders charge a high interest rate that is not allowed in the state.
Also, some fake payday loan lenders coerce victims to make payments by sending them a forged legal document that represents a criminal complaint or civil lawsuit. However, the documents may be totally fake.
To protect yourself against loan scams, it is important that you remain wary of emails or phone calls that offer you quick cash regardless of your income and credit score. You must never apply for a loan or make any payments before conducting a thorough background check on the company.
Also, you must immediately consult with your legal attorney to determine the legality of complaint or summons. In case you have made the payment but the legal complaint turned out to be bogus, you are entitled to receive a certain amount to recover the loss under the Fair Debt Collection Practices Act.
On a final note, you must report any kind of suspicious messages regarding payday loan lending with the local loan agency. If you receive a call from an individual claiming to be a representative of a particular payday loan lender and threatening legal actions, you must immediately hang up the phone and dial the company directly to determine the authenticity of the claim.
A little precaution on your part will go a long way in ensuring that you don’t become a victim of a payday loan fraud.