Hopefully you’ve never had to take out a payday loan; they
are the bottom feeders of financial products. Unfortunately, however, they are
hugely popular among the American working class. Don’t believe it? In a
factsheet compiled by PaydayLoans.org you will discover that there are twice as
many payday loan locations as there are Starbucks, and in 29 of the 35 U.S.
states where payday lending is legal, there are more payday loan locations than
McDonald’s!
Who knew that was possible?
Furthermore, these seemingly simple loans which are super
easy to obtain but nearly impossible to repay cost Americans 3.5 BILLION
dollars every year in fees! And it’s no wonder; 76% of total payday loan volume
is repeat loans. Most borrowers find themselves needing a lump sum of money for
an important, often unexpected expense. Payday loans, as the name suggests,
offer a quick solution based on your employment and provides short-term
financing to be collected from your next paycheck. On the surface, it sounds
good and fair. However, the reality is
that low-income borrowers cannot usually afford to repay all at once because it
represents too great a percentage of their regular paycheck. So, what does your
friendly neighborhood payday lender do if you find yourself unable to repay in
full as agreed? He or she simply offers an extension, which is really a repeat
loan, until you can pay in full…for a fee. The vicious cycle is normal in the
payday loan industry because the typical borrower does not make enough money to
live and repay the loan in full within 14 days. Sometimes borrowers even try to
borrow from Peter to pay Paul – taking out one payday loan to try and pay off
another only incurs more payday loan debt and exponentially increases the size
of the problem if things are not handles precisely because the cycle usually continues
until the house of cards comes crashing down.
What’s worse is that many payday lenders sell your personal
information to third parties! It’s right there in the privacy policy that most
borrowers don’t read. So, the question is, “Who do payday lenders sell your
information to?” One answer, among others, is scam telemarketers. Third parties
get your information and call borrowers posing as law enforcement agencies who
are ready to prosecute for delinquency in repayment. Although you may be
surprised to learn that such fraud is taking place, both the
Federal Bureau of Investigation and
Lawyers.com websites have published warnings against this
elaborate scam. Apparently, many payday loan borrowers have fallen victim to
these fast talking imposters; ignorance of the law, fear of prosecution, and
other factors, causes unsuspecting victims to get spooked. These payday loan
collection scammers have attacked my own family and friends, and had we not
known as much about the law and standard business operations as we do, we may
have been exploited like other unfortunate payday borrowers.
When my husband first received the phone call he was
spooked; the voice on the other end of the line sounded very official, and the “officer”
from the “Bureau of Investigation” was angry. He told my husband that there
were multiple felony charges against him for lack of payment on his supposedly
delinquent payday loans. Thankfully, by this time he had paid all of his payday
loan debts except for one, and he was in good standing with the lender. So, that
fact alone caused him to be suspicious. As the “officer” continued, he threatened
to transfer the call the call to a “chief officer” to execute arrest warrants
for him if payment arrangements were not made immediately. Fearing for what
would happen to me and my children if her were imprisoned, my husband asked what
he could do. He was then instructed to purchase a prepaid credit card and load
money onto it without activating the card. The scammer claimed that they would
take care of the activation and all those particulars, and that the account would
be settled if he complied.
After he hung up and thought about it for a while, my husband
asked me what I thought. Between the two of us I know more about the law and
government, so I recognized immediately that this was a scam. However, the prime
targets for this fraud are not so lucky. Statistics show that civic literacy in
the United States is staggering; across class and gender lines, high school
graduates know less and less about the Constitution and how government works,
much less what government agencies actually exist and what they can and cannot
do. So, anyone calling with an authoritative tone claiming to be a government or
law enforcement official can easily intimidate the average citizen. Furthermore,
very few people who have not actually been processed within the penal system
know the ins and outs of how people are charged for crimes, i.e. what actually constitutes
a felony and how felony charges would be made against someone. Payday loan
collection scammers count on this civic ignorance and successfully exploit thousands
of unsuspecting people, convincing them that their very way of life is at stake
if they do not comply.
In addition to ignorance of the law, previous run-ins with
the law are something payday loan collection scammers depend on. Many people
who take out payday loans have criminal convictions or outstanding legal issues
such as suspended driver’s licenses, unpaid tickets, or back child support.
While it may seem prejudicial to assume such, the truth of the matter is that
the financial circumstances that force people to use payday loans also prevent
people from meeting their legal as well as their personal financial obligations.
So, if an individual is already fearful of prosecution or penalty and they are
confronted with the possibility of facing criminal charges, they will be more likely
to comply with unusual or unreasonable demands.
After I assured my husband that there was no possible way
that the call could be legitimate, he called the one payday lender he was sure
he still owed. They confirmed that his account was in good standing and that
they would never make such a call or take such measures to collect. The
representative he spoke with advised him to request whatever the caller
proposed in writing because she also believed it was a scam. In the first phone
call, the “officer” said he would call back within a couple days, and he did as
promised. When he called back, my husband asked him to send whatever he was
saying in writing. The scammer actually got loud and belligerent, spewing more
threats of swift legal action and making personal attacks against my husband’s
character! However, when he wouldn’t budge, the guy just hung up. We shook our
heads and discussed the ordeal, thanking God we didn’t succumb and wondering
how something like that could have ever happened.
A couple weeks later, it happened to a friend, and he had
only applied for a payday loan
online. He didn’t even receive the loan! When he told me his story, I knew a
full-fledged scam was going on…and that someone somewhere had fallen for it.
According to the FBI, Better Business Bureau, and other authorities, thousands
of people across the U.S. have been defrauded this way. Don’t be one of them;
know your rights and your responsibilities with your finances, under the law,
and in every other way applicable. In this case, as in all others, ignorance is
what makes you a target. Knowledgeable people don’t scare easily, and they
certainly don’t follow the instructions of an angry stranger on the other end
of the phone.
Labels: I_C_Jackson, payday_loans, scams
