Be wary of payday loans online

via Be wary of payday loans online, clarionledger.com

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Pymnts.com

PDF: online-payday-loans

The online loan industry is booming, and with it, the potential for fraud. Every day, cash-strapped Americans fill out loan applications from ads they see on websites, social media and emails. While some of these companies are really offering loan services or connecting borrowers with real loans, many others are just a way for scammers to make a quick buck.

Some consumers who thought they were applying for payday loans online got a nasty surprise a couple of years ago when their information was allegedly sold to scammers who cleaned out their bank accounts and maxed out their credit cards without their consent. The Federal Trade Commission announced last week that they’d closed down one such operation.

The FTC reports that it has charged one defendant, Jason A. Kotzker, and co-defendants with taking the information from consumers (which was supposed to have been sent to payday lenders) and instead passing it to companies like Ideal Financial Solutions, which then “raided consumers’ accounts for at least $7.1 million.” Then, the agency alleges, Kotzker and fellow defendants helped Ideal Financial hide the fraud from banks.

This isn’t the first time the feds have shut down such “data broker” operations, which target consumers seeking online payday loans. Instead of offering them the loans they sought, these operations have often signed consumers up for “membership programs” which are nearly impossible to stop. Such scams are plentiful and lucrative for their operators and won’t stop anytime soon.

If you’re looking for a loan online, you need to be careful. Many legitimate-looking sites are just fronts, designed to reassure you that you’re dealing with a legitimate company. The FTC has some good advice to avoid becoming a victim. Here are a few suggestions, from the FTC and other sources:

  • Keep a close watch on your information. Merely filling out the fields on an online application — whether or not you hit the “submit” button — can be dangerous. Many scam sites use keylogging, software that tracks and records your keystrokes.
  • Read the fine print. If any part of the application or fine print is hard to read or decipher, don’t follow through.
  • Review your bank accounts for unauthorized charges. Scammers can hit their victims pretty quickly online, so it’s important to review your bank statements thoroughly, or (better yet) track your bank accounts daily through the bank’s website or app. This will let you know if anything’s fishy so you can report it.
  • Beware of “no-credit-check” loans. Most lenders are going to perform a credit check to determine your creditworthiness before offering you a loan, even if it’s just an employment verification. If there is no evidence the lender has checked into your credit or background, it could be a red flag.
  • Beware of unsolicited offers. Often, tracking software can help flag web users who look online for loans. This can lead to pop-up ads and unsolicited loan offers. Disreputable companies often use these tactics to find victims.
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