Wednesday, May 2, 2012

Payday Loan Scams

Recently I've encountered an increase in consultations for people who are getting harassed by "payday loan" companies who have allegedly hired a law firm to collect money for them.  This week's scam was particularly worrisome as they were preying on a retired client of mine who lives on a fixed income and is now without more than $1,000 that he could use to live on.

The scam seems to go like this: you get a call from a "lawyer" representing a payday loan company who informs you that if you do not pay them within a few hours, you will be arrested.  When you attempt to arrange for a payment by check, credit card or other means, you are told that only cash or a "MoneyPak" will suffice (MoneyPak must know that they are being used this way as there is even a "Fraud" warning section on their product).  You get the MoneyPak, you provide them the number, and you never hear from them again, at least until the next time they attempt to prey upon you.

It appears what has really happened is that the money has been sent overseas to a company that is using VOIP technology to fake their presence in the United States.  If you ask the person on the phone any questions, they get angry at you, refuse to answer and say that they are sending an officer to your home or work to arrest you.

If they do provide you any information, it is usually the name of a law firm (who has no connection to the scam and who has no idea their identity is being used for collections purposes) who is supposedly collecting the debt for the loan company.  They will refuse to tell you their name, the information regarding the loan you supposedly owe money upon or any other information regarding the debt.

Unfortunately, if you send them any money, you will likely never see it again.  When you look up the telephone number they called from on the internet, you will find a list of people who were also scammed. When you look up the attorney who supposedly called you, you find it's from a state where you've never been and an attorney who does not practice collections law.  When you contact MoneyPak to get your money back, you'll find that there is no way to get your money back.

The FBI is aware of this scam, http://www.fbi.gov/scams-safety/e-scams, but unless people actually question the caller and ask the questions, this scheme will continue to prey upon innocent people who can't afford to lose their hard earned money.

For more information on defending yourself against these scams or to schedule a consultation, please call the office (718.568.0221) or visit my website (AndrewMAyers.com) for more information.

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