By Adrian Moreno / Updated: Mar 16, 2020

Tips On How To Avoid Payday Loans Scams

Payday Loans ScamsSince payday loans are one of the most popular forms of borrowing money now, there should be no surprise that scams are a common phenomenon in this field. Sometimes telling who is a trusted lender and who is not, becomes a genuine challenge. sheds light on this subject and helps borrowers understand how to avoid payday loans scams.

Are all payday loans scams?

Not all payday advances are scams; some legitimate lenders provide such type of credit. However, payday loans are costly sometimes, and this is the reason why some accuse them of being a scam. Normally, you will have to pay $15 to $30 per $100 you borrow, which results to at least a three-digit APR.

Payday loans are also considered a trap for borrowers and lead them into endless debts. Since cash loans have high fees, borrowers often experience trouble paying them off. It causes them to apply for even more payday loans to pay back their initial debts.

Nevertheless, this doesn’t make payday loans a scam, but just a form of borrowing money one should resort to, in cases when quick cash is necessary.

On the other hand, some payday advances are real scams. To protect yourself, you need to know what to be cautious about.

How do payday loan scams work and how to avoid them?

The same as many financial industries, the payday loan business has scammers that prey on desperate people. Such scams are becoming more and more common nowadays. To keep away from being trapped in this scam, get informed on main tips below and become aware of consequences.

Stay away from online payday loans lenders that have a doubtful website

The best option to protect your budget is to stay away from online loans lenders that have an unsecured internet site (no https in the address) or have no physical address.

Have no trust in a phone call or an email

Be cautious if you get a suspicious phone call or email from anyone stating that you owe them money for a payday loan debt. This may be a scam. There is a high chance of having your personal data shown somewhere with no permission. Since it is easy to verify such kind of information, be watchful of posting such details as full name, date of birth, social security number, address, employer, etc. on unsecured websites.

Insist on a written confirmation

As a follow-up of the previous advice, do not proceed to sign any agreement until you obtain written confirmation of your debt. Receiving an email does not count. You should first make sure if the debt imposed on you is real and legit before providing any bank details or money. A national press release by the Federal Bureau of Investigation warns that one should be mindful to any e-mail with urgent requests for personal financial evidence. Such e-mail may contain upsetting or exciting but false statements to make you react immediately.

Compare multiple payday loan lenders

It may be tough to identify the legitimacy of one payday loan website by itself, but you are able to spot red flags* by looking at multiple websites.

* A red flag could be a signal of various problems, including identity theft. It could show a new account that the client did not approve or an inquiry from a company that does not hold authorization.

Look for information and reviews online

Negative information online could point to a payday loan scammer.

Do not provide any personal or confidential information

As stated above, a person attempting to scam you out of money might already possess your personal data. It could have obtained it from an online form you had previously submitted. The FBI appeals for not presenting your Social Security number – or any other personal information – via phone unless you started the contact.

Understand the laws governing payday loans in your state

Many states severely control the payday loan industry, and in a few states, they are not legal at all. Being familiar with the laws will help you detect whether a loan operator is legit or simply trying to scam you. To be fully informed, check out the legal status of payday loans by state.
How to protect yourself from payday loan scams

Immediately report fraud

If someone who you think has dishonestly received your information to collect money contacted you, fill out a complaint with FTC right away.

Take action if you have been a victim of a fraud

Take instantly appropriate precautions if consider you have been scammed by payday lenders:

  • Contact the FTC directly.
  • File notices with the 3 main credit bureaus (TransUnion, Equifax, Experian).
  • Contact your bank and make them aware.
  • Keeps a wary eye on all of your personal accounts moving forward.

Work with an online loan matching service

When you do need to take a payday loan, and you initiate the procedure of looking for a loan, choose a reputable partner. is an online loan matching service that works with a database of lenders who have proved that they are honest and operate within the legal frames.

1 FinWeb “Payday Lending: 5 Tips to Avoid Being Scammed”

2 HuffPost “5 Ways to Protect Yourself From Payday Loan Scams”

3 StudentLoanHero “7 Surprisingly Easy Ways to Spot Personal Loan Scams”

4 Scam-Detector.Com “Payday Loans”

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