How Do Payday Loans Work Blog

Better Business Bureau announced last week details about a new payday loan scam that has been targeting people on a national scale. BBB is issuing a warning to those that already have payday loans, those that are thinking about taking out a cash advance, or those have gotten them in the past.  The scam makes an attempt to collect on a payday loan by declaring the loan to be in default and that the caller is a lawyer working for a, non-existent, lender agency and threatens legal action including jail if the loan is not paid back right away.

The caller claims to be part of one of either two agencies that are both fake, but sound official, and they provide a lot of detail personal information.  This makes the call sound very legit and gets some people to think that this true and that they need to pay the cash advance loan back.  They will request up to $1000 to be wire transferred, charged to a credit card, or electronic fund transfer immediately to avoid jail.

BBB is most concerned over the availability of personal information and how it was obtained. When the scammers are calling these people, they already have a lot of personal information and the BBB feels that more may have been compromised, but can’t say for sure.  Whether or not the data was stolen, hacked, or provided from an industry insider, the fact remains that the call is a scam and do not provide any money or details to them.

If you get such a call, what do you do? BBB recommends requesting formal documentation of the bill as well as the collection invoice.  Many of the scammers will try to get around this as they don’t have any such information.  If they can’t provide it to you then don’t worry and tell them you will threaten legal action if they don’t provide such documentation and don’t stop making harassing phone calls. The bottom line is that you can’t go to jail for defaulting on a payday loan and they are only using it as a tactic to scare.  Don’t send any money, don’t provide any additional personal information, no matter what they already have.  In addition, try to collect as much data as you can from the caller, such as business name, address, phone, contact person, and other data that can be used to report them to the BBB or local authorities.

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