Scamalot: The Payday Loan Collections Scam

Posted on 03 September 2012


 

As Labor Day 2012 dawns, 23 million unemployed Americans have little cause to celebrate.  Countless more are employed or underemployed and struggling to make ends meet.  They are using credit cards or equity lines (if they still have equity in their homes) to cover the shortfall – when necessary – between their monthly incomes and expenses.

 

Those without access to more tradition forms of credit, however, often fall prey to what are referred to in the industry as “hard money lenders.”  Among these are lenders who offer “payday loans.”

 

Payday loans fall into a category that may be termed “short-term financing.”  While payday loans grew in popularity in the 1990’s and exploded with the growth of the Internet, short-term financing has been around for thousands of years.  The primary difference between the two lies in the degree of scrutiny involved in securing such financing.

 

Payday loans typically have a comparatively low threshold for approval – requiring only a source of income (usually a minimum of $1,000 monthly) and a checking account (into which funds are typically wired).  In most cases, no credit checks are performed and the money is available within one business day.

 

Interest rates for these types of loan products are high, and as one might expect, default rates are significantly higher than for credit cards and other forms of more traditional financing.  Also not surprising, the high default rate has attracted the attention of scammers looking to earn a quick buck on the misfortunes of others.

 

In boiler rooms in India, Pakistan, and other foreign countries outside the jurisdiction of U.S. law and courts, scammers harass those in default (and sometimes, those not so) on payday loans – primarily those applying or receiving payday loans from online sources.  Employing scare tactics and, frequently, abusive language, fraudulent telephone loan collectors pose as representatives of the FBI, “Federal Legislative Department,” various law firms, or other legitimate-sounding agencies and claim to be collecting debts for companies such as United Cash Advance, U.S. Cash Advance, U.S. Cash Net, or other Internet check-cashing services.  Refusing to provide any specific information, these fraudsters relentlessly call their victims at home, on their mobile phones, and at their places of employment demanding payment via credit or debit card.

 

Even though delinquencies or defaults on indebtedness are a civil and not a criminal matter, these predators threaten their victims that they will be arrested and jailed if they do not pay.  In a more recent twist, these phony collection efforts involve boots on the ground.  In a recent complaint, a person posing as a process server appeared at the victim’s job.  In another, a phony process server came to a victim’s home.  In both cases, after claiming to be serving a court summons, the alleged process servers informed the victims that they could avoid going to court if a debit card number for repayment of the loan could be provided.

 

The experiences of victims are perhaps most enlightening in demonstrating the nature of these scams.  Angie from Dallas, Texas wrote:

 

“haha…i almost got scammed… same thing…. saying they were investigating a internet fraud payday loan…I could not even understand what the heck he was saying…. he almost had me until I asked for more details… he said it was from quickcash.net and it was from 2010 no other info… told me i would be criminally charged etc..etc.. I was really scared…cuz i knew i was default on a payday loan.. ( i have worked it out) but in the meantime i told the rep at the actual payday loan company of this and he said that it is a huge scam..says unfortunately people get scammed by them all the time and because they are in India they cant be touched by our laws… My harasser was Douglas Brown and when they call 0000 comes up on my phone.. to call them back he said I should call 661-347-6521 I did… it goes to a voice mail then immediately i get a call back from the 0000 number… saying i missed a call from this number… and asked who i was calling for… I told him (Douglas yeah right) that I worked it out with my PDL company he said it was not the same.. and that if I didn’t work with them then they will send officers and I could sort it out in court…I am waiting…. scary he has all of my info though… REAL scary..”

 

Paula from San Diego, CA writes:

 

“My sister has been receiving calls from “American Legal Services” also. They have not only called her non-stop on her cell phone but have called her place of employment several times a day. This is causing problems with her employer. They are now calling my cell as I was her contact number. At first my sister thought this was a legit company and she did indeed send them some money but when they called me I got very suspicious. They do not speak English well at all and boy are they rude and do they ever cuss you out! Wow! They hang up a lot on you and make demands that no legal collection company would ever make. I worked in collections for years and I know this isn’t normal. When they first hung up on me I called them back and told them to never do that again and also told them I knew this was a scam. Of course I was told my sister would go to court and pay many legal fees and would be so sorry if she didn’t send more money. They said she would go to jail for 6 months unless they received the money. They have used the names John Watson and David Jones. They call from 562-314-4852 and 302-526-4898. After I called them out on their scam they will no longer answer at the 562-314-4852 number. I am having my sister file a complaint with our local police department and Homeland Security because this has to stop.”

 

If you believe that you are the victim of a payday loan collections scam, or another form of unfair debt collection, learn more about your rights under the Fair Debt Collection Practices Act (FDCPA) on the Federal Trade Commission website (http://www.ftc.gov/os/statutes/fdcpajump.shtm).  If you are contacted by someone who is trying to collect a debt that you do not owe, you should contact your local law enforcement agencies if you feel you are in immediate danger, your bank(s) and credit card companies, and the three major credit bureaus to request an alert be put on your file.  If you have received a legitimate loan and want to verify that you do not have any outstanding obligation, contact the loan company directly.  Finally, you may file a complaint directly at the Internet Crime Complaint Center (www.IC3.gov) – a partnership between the Federal Bureau of Investigation (FBI) and the National White Collar Crime Center (NW3C).

 

Stop the scammers in their tracks!





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11 Responses to “Scamalot: The Payday Loan Collections Scam”

  1. cash says:

    Thank you for the sensible critique. Me and my neighbor were just preparing to do a little research about this. I think I’ll stay away from these types of loans.

  2. julianne456 says:

    I truly appreciate this post. I’ve been searching for information on this scam. Thanks.

  3. georgia baptiste says:

    great information here. Ill be back for your next posting.
    keep writing and happy blogging.

  4. Natasha C says:

    Hi there, You have done a great job. I will certainly
    digg it and personally suggest it to my friends.

  5. clifford yarbrough says:

    Very good article. I absolutely love this website. Keep it up!

  6. Garnet says:

    Preying upon people in desperate straits is an age-old ploy used by con men and politicians.

  7. J. Almeida says:

    Today, everything is a scam! In fact, there are many businesses that are little more than whitewashed scams. Just watch American Greed.

  8. Mrs Jenna Mooner says:

    Good Day Everyone,

    I am Mrs Jenna Mooner,i am married with two kids and i live in United State Of America.I want to testify about a loan company, On the 2th of March this year ,I was having a little problem with my land lord and our case was in court, so i needed to get a house of mine so that i can be free from my land lord’s problems and harassment. finally.. I am giving this testimony not for too much reason but just to fulfill my own bargain of the promise i made to ROBERT SMITH LOAN COMPANY that i was gonna carry out as soon as i get my loan within 48 hours as they insisted and guaranteed me that i will soon get my loan funds. I do not have much to say but the issue is that i never believed or thought that i was gonna get a real loan without been scammed by my other lenders. I lost $2,500.00usd in 2 weeks and due to this i loosed all interest and i never believed that i was gonna get a loan online and all effort to get a loan from my bank was not possible because i have my credit score was low…. the issue is that if i start talking about all that i have been through … i wont be able to complete ti because i have really been through a lot . I was surfing through the internet some few days back and i saw an advert from Mr Robert Smith,the C.E.O ROBERT SMITH LOAN COMPANY , i thought it wasn’t real so i forgot about it but something kept on telling me to try my luck for the very last time and after 2 days of my thoughts i went back to that site and i applied through his email address which is robertsmithloancompany007@gmail.com and everything went on but until now i was still scared because i never wanted to experience what i had experienced before. Finally i gave in because i needed a loan so bad and not minding how it was gonna come through but fortunately for me, I got my loan so easily and so quick without problems or delays WITHIN 48 HOUR from the ROBERT SMITH LOAN COMPANY. All i wanna say is that God Bless You All especially Mr Robert Smith for been honest to me and also a very big thank you Mr Ikhide Godwin Saint who is the chief receiving officer to ROBERT SMITH LOAN COMPANY For keeping to your words by giving me that loan of $ 55,000.00usd at the exact time you promise me,am so grateful,may the good God who created the whole universal and here is his email address just in case if you are in the situation and doubt i was in before i got my loan or if you are also in need of a loan too,you can reach them with via email here robertsmithloancompany007@gmail.com.

    Thanks,

    Mrs Jenna Mooner

  9. janelle coombs says:

    Hi, i think that i saw you visited my website so i came to “return the favor”. I am trying to find things to enhance my site! I suppose its ok to use some of your ideas!!

  10. tiffany c says:

    I am not sure the place from which you’re getting your info, however great topic.

  11. Anna James Anderson says:

    Scammers will always find a way to steal money, even from those who need it the most. They have no conscience.


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