Payday Loan Debt Scams
In certain circumstances, debt collection is legal. A lender might hire a debt collector to collect the money you owe. It is possible not to be sure if debt collectors are genuine or trying to defraud you.
The following information will help you determine if a collection agency for payday loans has contacted you and what to do if it is fraudulent.
How do they scam payday loan debt collectors?
Today’s scam debt collection schemes claim to collect money for consumers who have never received a “payday” loan.
To coerce debtors to pay, they use various deceptive, abusive tactics, such as repeated phone calls, verbal harassment, threats to reveal debts to family members and employers, and threaten to do so to their families.
False debt collectors will try to intimidate you into paying your debt. Some bogus collection agencies have the ability to purchase black-market lists of debtor accounts and contact these individuals to demand payment.
This happens without the knowledge or consent of the original creditor. Although creditors may have a valid claim against the debtors, the scammer does not have the authority or the right to contact them. They are just calling from a list. This is theft, and scammers have been convicted.
Sometimes, identity confusion can lead to situations. For example, if a legitimate debt collection agency makes an error, they may believe that you owe the debt incorrectly. You may be a victim of identity theft or an accounting error by the original creditor.
Pay attention to the following red flags.
Fake payday loan collectors target payday loan customers in the past and threaten them with jail time or other penalties for not paying debts.
This is illegal even though they are collecting legitimate debts. These threats are legal or illegal, and debt collection agencies do not have the authority to make them.
Fair Debt Collection Practices Act prohibits debt collectors from harassing, oppressing, or abusing anyone they come in contact with (FDCPA). They cannot curse you or your property, threaten you with illegal acts, or falsely threaten to take actions they don’t intend to.
They cannot harass or annoy you by calling you multiple times in a short time. You can request that the debt collector stop contacting you.
How to identify a legitimate debt collector?
Without verifying your identity and confirming your license status, you should not give out any personal information to anyone. These information includes your bank account number or credit card number.
Scammers can sometimes get personal information by tricking people or simply by searching the internet. This includes banking information, as well as the last four digits from a Social Security number.
Legitimate debt collectors already have access to many details about you, such as your amount owed, address, social security number, birthday, and birth date. However, debt collectors will likely request all your information.
To determine the credibility and legitimacy of the claim by a payday loan debt collector, follow these steps.
- Knowing who you owe money to is the most effective strategy for avoiding a debt collection scam. AnnualCreditReport.com is the only federally authorized source for free credit reports.
- Ask for the collector’s name, business, mailing address, and telephone number and cross-reference this information with the FTC’s Banned Debt Collectors database. Legitimate debt collectors must provide contact information and information about the debt.
- Ask for proof in writing that you owe this debt. Federal law requires that debt collectors send you a validation notice. This notice should include the amount owed, the name and contact information of the original creditor, as well as for instructions on how to dispute the claim.
- Learn the laws in your state and area. To compel payments, some payday loan collectors create fake documents. However, many states require that consumer debt collection agencies register before conducting debt collection activities within their territory.
It would be best if you did not fall for the trap of believing you owe the debt.
- Contact your original creditor and hang up.
- Find out if the debt was purchased or authorized to be collected by a debt collector.
- Keep a log of all debts you have paid.
- Make a copy of any correspondence or documents that you receive from a debt collector.
- Keep track of all interactions and take detailed notes.
What are your options in the event you suspect that you have been duped?
You should immediately report to the Federal Trade Commission if you suspect you have been a victim of a debt collection scam (online or by calling 877-382-4357). The Federal Trade Commission will terminate the debt collection activities of fraudulent debt collectors as part of the settlement.
The Federal Trade Commission created a nationwide outreach and law enforcement program. With more than 50 state and federal law enforcement partners to protect consumers from fraudulent debt collection practices and abusive and threatening debt collection methods.
Operation Corrupt Collector uses illegal scare tactics to target debt collectors who are trying to collect fictitious debts.
The FTC works with local and state consumer protection agencies to provide new information that will help consumers understand their rights to debt collection and what to do when they are called to collect on an account they don’t recognize.
The FTC also launched an online dashboard (link external) that provides information about consumer complaints regarding unpaid debts and abusive and threatening collection methods.
You can also contact the Consumer Financial Protection Bureau online or call 855-411-2372 to report any debt collection fraud.