Tag Archive | "payday loan collection scam"

Scamalot: The Payday Loan Collections Scam

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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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