Are you the target of a payday loan scam?

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Consumers who have taken out a payday loan in the past are often surprised to receive harassing calls pressuring them to settle the unpaid payday loan debt. In some instances, however, the person does not have any unpaid debt. In others cases, the person has never taken out a loan. Although the caller might use different aliases or claim to represent different companies, there are some common characteristics when it comes to identifying a payday loan scam.

Payday Loan Scam and Illegal Threats

Consumers who are victims of this type of cash advance scam report threats of arrest or incarceration unless the caller receives a specific amount of money. Other scammers tell their prospective victim that a package containing drugs and addressed to him was intersected.
Unless the person agrees to pay a fee, he will be arrested. After numerous threats, the caller instructs his prospective victim either to send him money or to forward a signed authorization along with the credit card information.

There are various variations of this scam, but they all involve threats and the request for money. Be aware that legitimate debt collectors do not threaten to sue debtors or to have them arrested. Such threats are equivalent to extortion. The Federal Debt Collections Practices Act (FDCPA) protects consumers against such tactics, and most debt collectors know this. 

A creditor cannot have you arrested for unpaid debt. There is a procedure that he needs to follow if he wants to take legal action against you. Abusive and obscene speech is also illegal under the FDCPA. 

Payday Loan Scam and Requests for Money

Characteristics of a legitimate debt collector:

  • No threats or abusive speech.
  • Will cease all telephone communication if requested. 
  • Will send you a written agreement before you send any money.
  • Has a physical address in your country.
  • Has a landline phone number.
  • Has an official website.

Characteristics of a payday loan scammer: 

  • Makes threats and uses abusive speech. 
  • Continues to call even after being asked to cease communication.
  • Will request a signed authorization to withdraw funds from your credit card or bank account.
  • Will often request money through moneygram.
  • The scammer might request that you  fill out a form and include all your personal information. 
  • Does not provide a physical address. 
  • Does not have an official website.
  • Will change phone numbers often.
  • The caller often uses an American name but has a heavy accent. 

Other Abusive Tactics Associated With Payday Loan Scams 

Reports indicate that this type of scammer will often harass family members and even the victim’s employer - all in an effort to intimidate the victim and extort money. There are no known reports of physical harm, but in some cases, the caller will make it known that he has the person’s physical address, the date of birth and the social security number. The person’s main objective is to obtain money.

As far as how the scammers obtain a debtor's personal information, it is unknown. A security breach is one possibility. Unreputable online payday loan company websites are another theory. Phishing websites are still another possibility. If you choose to apply for a payday loan online, make sure the payday loan company is legitimate. For tips on how to find legitimate fast payday loans, refer to the resource section below.

When You Become the Target of a Payday Loan Scam 

If you become the target of a payday scam, don’t panic. Never give anyone access to your bank account or credit card account. Never send anyone money unless you are sure that it’s a legitimate business. 

Scammers will often misrepresent themselves. They often claim to be FBI agents, to belong to an official banking institution, to represent a collection agency or to represent a law firm. Do not give the caller access to any accounts or personal information. If you have any doubts as to whether a call is legitimate, contact the company or institution directly.  

According to, if you receive harassing calls associated with payday loan scams, or any type of scam, contact your local police department and your  Attorney General’s Office, report it to the FBI and file an online complaint with the Federal Trade Commission.   

Unfortunately, the law is often unable to do anything about the situation. Scammers often use prepaid cell phones or VOIP, which makes it difficult to trace them. The best thing that consumers can do at times is to change telephone numbers, says ConsumerFraudReporting, because the scammers will not listen to reason or respect a person’s wishes to cease all telephone communication.   

Copyright © 2011 Ana Jackson. All Rights Reserved. Reproduction in whole or in part constitutes plagiarism, is illegal and strictly prohibited.