Scam Alert: Payday Scammers Use Brand Name as Ruse
A new payday scam uses the brand name of a nationally-advertised payday loan company to fleece would-be customers.
Payday loan company Advance America is warning of this scam, in which crooks are contacting cash-strapped people in Kentucky (and other states) offering loans.
According to the company, the crooks pose as Advance America representatives to collect money from unsuspecting consumers.
Here’s how the scam works:
Version 1: The fake “Advance America representative” contacts a victim, saying that the victim has been pre-approved for a loan. This “representative” then asks the victim purchase a prepaid debit card or wire money as a “processing fee” or “good faith deposit.”
Version 2: In other cases, scammers seek to collect on “unpaid” payday loan debt — often threatening arrest or legal action or demanding personal financial information over the phone.
In both cases, the victims are asked to give money in advance, in order to receive some benefit.
Now, we’ve warned about these kinds of things before, and strongly advised that you should NEVER give money to anyone in advance of getting a loan (or other financial benefit).
This is especially true when some company reaches out to you via phone or email.
We’ve also cautioned against using payday loans in general. These companies (and we’re talking about the legitimate ones) charge a lot of interest.
Borrowers often get into a cycle of debt in which they pay off one payday loan with another, burying themselves in a permanent state of indebtedness.
Before you do business with ANY payday lender, you should visit your credit union and ask about taking out a personal loan. CUs offer very fair rates, and can often help you to get out of high-interest debt with a lower interest personal loan. Do this before resorting to payday lenders.
Copyright Today’s Credit Unions