Be on the lookout for payday loan debt collection scams

seeing through a payday loan debt collection scammer

Consumers can see through the payday loan debt collection scam if they understand their rights, the law and their finances. Thinkstock photo.

A payday loan debt collection scam has been victimizing consumers in Illinois. Con artists posing as debt collectors have somehow obtained the phone numbers and personal data of current and former payday loan borrowers. Reaching their targets on the phone, the fraudulent payday loan collectors use scare tactics such as bullying and the threat of lawsuits and jail. The payday loan debt collection scam has proliferated to the point that Illinois Attorney General Lisa Madigan has issued a consumer alert.

Debt collection scammers use threats and intimidation

In recent weeks, the Illinois attorney general’s office has fielded a marked increase in consumer complaints about phone calls from bogus payday loan debt collectors. Consumer Affairs reports that people who have gotten payday loan scam calls say they’ve taken out payday loans, most often from online payday lenders, but have paid the debt on time. They say the scammers know their names, social security numbers, employer and bank account numbers. Because the con artists have such sensitive personal information, their victims often believe the debt collectors are legit. The scam artists use threats and intimidation, such as lawsuits and jail, to dupe them into authorizing a direct withdrawal from their checking account. Sometimes, consumers are tricked to sign promissory notes and fax them to the bogus collectors.

Legitimate payday lender compromised

Illinois payday loan store customers aren’t the only ones getting harassed by debt collection scammers. Wallet Pop reports that the payday loan scam calls have surfaced in Ohio, Colorado, Florida, Indiana and other states around the nation. Madigan said the scammers say they are from a variety of bogus companies, such as Morgan & Associates, Federal Bureau of Investigators, DNR Recovery, DNI Recovery, Legal Accounts Association, Department of Law and Enforcement, CashNet USA, America Legal Services, Quick Cash and ACS. Most of the names are fake. However, CashNet USA is real. On its website, CashNet USA has posted a warning about the scam.

Debt collection harassment is illegal

Under the FTC’s Fair Debt Collection Practices Act, it is illegal for debt collectors to call before 8 a.m. or after 9 p.m. They also can’t demand more money than what is owed, reveal a consumer’s debt to a third party or threaten lawsuits or arrest. Even so, some victims of the Illinois payday loan scam calls told Madigan’s office that they were fooled into paying several hundred dollars. Illinois TV station WIFR reports that Madigan offered some advice for people if they are contacted by the scammers.

People don’t go to jail for failing to pay a debt in this country.

Never give out any personal information over the telephone, especially bank account numbers or credit card numbers.

When in doubt, ask the debt collector to produce documentation that qualifies the debt they seek to collect.

Contact the original creditor to confirm if the debt has been paid. If not, confirm that the debt was sold to a third party collector before making a payment.