The recent economic downturn has witnessed declining income and people turning to payday loans to take care of urgent financial requirements. The online payday loan industry provides a fertile ground for frauds and online scammers.
Common types of payday loan scams
A very common form of scam is when a lender provides a payday loan at an abnormally low interest rate. The lender has no phone number or address on the website and also asks you to send more information than is actually necessary. The payday loan companies who are scammers will ultimately not send you any money and tell you that your loan has not been approved. Majority of the scammers are only interested in getting information about your identity like your credit card number, passport and social security number and various other forms of personal information. The main goal of scammers is identity theft.
How to avoid payday loan scams
– It is wise to be careful of lenders who provide exceedingly low rates of interest. You should compare different rates from various lenders who offer payday loans to get some idea on the payday loan standard rates. When you come across one of the websites where the rate is extremely attractive – may be below 10%, do conduct a search on the net to find out customer reviews about the particular company. Certain sites dedicated to consumer awareness present objective reviews relating to the services and products of the online companies. Try to conduct a quick check with the Better Business Bureau website to get to know whether the specific company has ever been involved in any scandal. Reading through real customer concerns as well as commendations prior to making a particular decision will have a direct effect on the near financial future. Also do ask your friends or family who may have used the company’s services.
– Check to see whether the website caries the CFSA (Community Financial Services Association of America) seal. This is the sole national regulatory body in the U.S who is responsible for regulation of the payday loan industry practices and looking after consumer interests.
– Another way you can avoid being scammed is by not submitting several applications from various websites. Many individuals stay under the illusion that the more applications they fill out, better are the chances of getting approved. You should be aware that several payday loan providing websites do charge some amount of fees for submitting an application. You do not want to be caught unaware later on.
– A legitimate payday loan company will surely have a physical address displayed on the company’s website. A proper company will not have any hesitation in disclosing its contact address, phone numbers and other details.
– Be careful of unwittingly signing on to third party payday loan lending sites. They take your online application around to several lending firms. Unless they come out clean as regards whom they are sharing your information with, it is not a good idea to place trust on these websites.
Finally, ensure you read the contract a number of times. Do place special importance to reading the fine prints relating to the repayment plan prior to signing on the dotted line.