Just like a media news cycle, it appears that the pay day loan folks are at it again. After a few months of peace and quiet, there has been another uptick in consultations with prospective clients who are being harassed by the pay-day loan companies. Now added to the mix are the folks from the American Indian reservations who have also jumped into the game, attempting to take business from pay day loan companies by claiming to have better rates than the pay-day loan companies.
The scam continues to operate the same way. You take a pay day loan to help you get through a rough time, and end up paying the amount back with a significant amount of interest. For example, you borrow $500 at a 20% fee, so you end up paying them back $600 at the end of the loan (an annual interest rate of more than 500%). If you need more time to pay them back, they usually offer an extension that will cause you to incur more costs. If you have approved them to automatically debit your bank account and the money isn’t there, guess what? More fees are added on to what you owe.
When the day finally comes that you have paid off the loan, you feel good and are happy to move on with your life. Until the calls begin to come to your home, threatening you with arrest if you do not pay more money to pay off the loan. There is often a “problem” of some type with your final payment and you are asked to immediately wire money or utilize some other non-traceable form of payment to “pay off” the loan (that you already paid off).
The problem, of course, is that this company is usually located overseas, using a “spoofed” telephone number to appear to be from the United States. They are not actually owed any money and are simply phishing for someone to be scared enough to send them money without confirming the actual debt that is owed. In order to scare you, they will rattle off a list of pay day companies until you confirm that you had taken a loan with one of them and then claim to be working on their behalf and with the local sheriff’s department.
The simple answer to all this is to force them to provide you accurate information and pay attention to the details (or lack thereof) in their telephone spiel. It is an intimidating call, but one that consumers should not necessarily be afraid of.
For more information on defending yourself against these scams or to schedule a consultation, please call my office (718.568.0221) or visit my website (AndrewMAyers.com) for more information.