Payday loan collection scam victims at risk of identity theft
The federal Internet Crime Complaint Center is tracking a new payday loan scam. The scammers claim to be collecting for an overdue payday loan. This scam appears to be targeting both former customers of short term loans as well as individuals who have never taken out a loan.
Payday loan collection scam
The basics of the new payday loan collection scam are simple. Someone calls from an official-sounding agency such as the Federal Legislative Department, various law firms or even the FBI. The caller will name your bank, account number, social security number, or even family member’s names. They will ask you to remit payment via cash, check, credit card or direct debit from the account they have on file. They will often ask for a signature on a document stating that you will “never dispute the debt,” among other things.
Risk of identity theft from the scam
The payday loan collection scam carries many potential risks. Not only could paying the scammers mean you lose money, but the amount of available information means you are at risk for identity theft. Some of the scammers even threaten physical injury. If you are contacted by these scammers, you should immediately take steps to protect your identity. Contact all three credit reporting agencies and put an alert on your account. Contact your bank and alert them. Finally, file a complaint with your local law enforcement and IC3.
Collection practices of legitimate payday lenders
Payday lending is a risky business. By offering credit products to consumers who have little or no credit history, short term credit locations take a big risk. About 20 percent of payday loans end up in default, and payday lenders have little recourse. A legitimate payday loan store, such as those that operate in Reno, Nevada, may contact you if you default on a payday loan debt. However, it will comply with all local and national laws concerning debt collection. Never be afraid to ask for verification or follow-up with anyone claiming to hold one of your debts.
2010 statistical analysis of payday lending