6 Signs of a Payday Loan Scam Since the major economic recession in 2022, the road to financial stability has been a bumpy one at best. And despite brief moments of optimism, a sharp and ugly economic downturn has continued to bear its fangs.
And for many of those bearing the effects of a tight economic squeeze, solace has come in the form of payday loan lending. For millions of families living paycheck-to-paycheck, bi- yearly payday loans have meant the difference between financial survival and bankruptcy. When an unexpected emergency strikes and funds are depleted, these short-term loans provide a temporary means for staying afloat, at least until the next paycheck
However, given the accessibility of payday loans, a number of frauds and scammers have leaped at the opportunity to falsely imitate legitimate payday lending sites and snatch up your hard-earned cash for profit.
The best way to defend yourself against a potential payday scam attack is to prepare your arsenal. Given the right knowledge, tools and preparation, anyone can avoid a payday loan imposter.
1. Rock Bottom Interest Rates
Think a 36 percent APR on a payday loan sounds too good to be true?
You’re probably right.
One of the most tell-tale signs of a fraudulent payday lending site is an incredibly low rate of interest. Although a dirt-cheap rate might seem alluring, the best plan of action is to head into your payday loan search with the understanding that short-term loans come with relatively high interest rates.
Payday lending is comparable to taking a taxi. The fees associated with both are relatively high, but you approach the service knowing you are paying extra for convenience and accessibility. The interest rates of experienced payday lenders are usually higher than traditional loan rates, so a company striking an offer simply unheard of can mean be a dead giveaway for scams.
2. They Can Call You, but You Can’t Call Them
You disclose your number and e-mail address when applying for an online payday loan, so why shouldn’t the company do the same?
One of the most sure-fire ways to spot an imposter is by a lack of company detail. Any experienced payday lending site will have direct and clear access for customers to contact the company, either through phone or e-mail.
However, simply displaying contact information on a payday lending site isn’t enough. Always call the number listed or send an e-mail even if you’re only slightly unsure of the site’s reputation. You may be given information opposite from the content displayed on the site, or worse, you may reach no one at all.
3. The Reviews Are Ho-Hum, Or Non-Existent
Even the least savvy shopper should know better than to rely on a company’s dazzling marketing scheme and glittering advertisements. When it comes down to it, understanding the pros and cons of a product can be best assessed by your fellow neighbor.
According to last year’s Online Influence Trend Tracker survey from Cone, over two-thirds of consumers had opted out of a purchase once they came across a slew of negative reviews. As it stands for 2012, the statistic has risen, with cancellations now upwards of 80 percent.
Whether it’d be an Amazon purchase of a payday loan, reviews are a means of honest communication between consumers. With no oversight or bias to filter their thoughts, reviews can be an extremely honest display of a company’s reputability.
If enough reviews of the lender don’t exist, consider asking around your family and friends. Although no one within your inner circle may have taken out a payday loan recently, chances are you’ll come across a “friend of a friend” if you continue to ask.
4. They Try To Intimidate You
Bullies exist in every segment of society. From pre-school playgrounds to corporate offices, there will always be individuals looking to victimize others for their benefit.
Payday lenders are no exception. According to The Internet Crime Complaint Center, victims of fraudulent lenders have contact their offices with a slew of complaints on a daily basis. They state that scammers tried to threaten them with arrests, and in a minor number of cases, physical violence if they were unable to pay.
Without question, these practices are illegal. No payday lender can send you to jail over a missed payment, nor should they ever be calling you to harass and threaten. Should a situation of payday lending intimidation occur, don’t hesitate to stand up to these bullies. Contact your state attorney general and the FTC to report the threats.
5. The Stamps of Approval Are Missing
These days, it seems just about anyone can start up an online business for free. With a few clicks of a mouse and a couple of key phrases, a business – whether legitimate or not – can market and sell their products with ease.
When it comes to payday lending, these imposter sites are actively searching for your cash and private information. However, certain oversight and regulations have given consumers the opportunity to distinguish between payday lending friend or foe.
The websites of reputable payday lenders will contain a few concrete signs of trust:
• Security certificates (SSL’s)
• An HTTPS:// sign and lock symbol in address bar on application pages
6. Something Seems Fishy
At the end of the day, your intuition will be the most valuable weapon in your arsenal when defending yourself against fraudulent payday lenders.
Whether it’s cheesy or cheap graphics, a number of misspelling and grammatical errors, or simply a funny feeling you get when browsing the site, always listen to your gut. More often than not, it can be a solid way to protect you against an online payday lending attack.
It’ll be Worth Your Work
Jobs are dwindling. Prices are rising. Although the economy may be in a crunch, your feelings of security don’t have to be. Financial emergencies and unforeseen expenses can occur to anyone and at anytime, and payday loans can be a lifesaver for anyone left to drown.
Although the search for the perfect payday loan lender may seem a giant feat, finding the right company will almost always be worth your work.…