Online Payday Loan Scams

Center for Responsible Lending and the Pew Charitable Trusts have been avid in fighting against abusive and illegal activities done by payday loan stores across various counties. Payday lenders in California who have been charging high-cost loans at storefronts for years are now going to be subject to new laws from the state’s financial regulators.

According to the financial regulators of California, they found out though online complaints that several of the payday lenders did not have legal rights or license to be operative in the area. Furthermore, these stores and lenders do not follow consumer-protection laws and other regulations.

Through a website, the California Department of Corporations has discovered that many short-term lenders that are operative online do not show their annual percentage rate figures. This APR, the standard for measuring the true cost of loans is made mandatory by both federal and state law.

In payday loans, borrowers tend to pay their debts through their paycheck or if that would not suffice the whole debt then they has to take out another payday loan from a different lender. This is what consumers would often call a payday loan trap because once they get a payday loan debt it is not very easy to get rid of it.

California’s law has placed a limit of a payday loan in a day. The largest amount that can be borrowed is $300 with a 15% interest. It operates in an annual percent rage that is 13 times more expensive than credit cards. Online payday lenders would ask their borrowers to share personal data that include their bank account information. There are some lenders who would deposit money on the accounts before the customers get a loan and then they take off money from the bank for refund. This has led some customers to close their bank accounts and even take legal actions through court.

Scammers Use Aggression to Scare Consumers

On the beginning of the year, the Federal Trade Commission was able to bust a scam in the payday loaning industry that involved Indians calling and harassing customers at home and at work to pay debts that they do not even owe. The operations were closed and the estimated damages of the scam amounted up to $5 million dollars.

The callers threatened to have the individual arrested if they do not pay their due loans; they even call their friends and relatives. One of the viewers of CBS4 has received one of these harassing calls and called the attention of the 4 On Your Side Consumer Investigator Jodi Brooks.

The scammers are using threat and aggression to scare people to paying bills that they often do not acknowledge. One customer, Shameca Farris was a victim of these phone calls. She shares that she felt violated for receiving such calls in her work place and receiving threatening messages in her personal phone. The caller insisted she had a payday loan that she owed, but she clearly knew that she did not.

She shares that they demanded $600 so that the issue will stop and they would not have to call her and demand from her again. The caller even threatened her of arrest if she did not pay up. According to Farris they are using embarrassment to get what they want. She was scared at first with the threats but later on she realized that they were nothing but empty.

According to the Denver District Attorney’s Office, though the threats may sound scary and overwhelming, these are nothing but a scam. Lies that their office would hear very often through complaints from consumers; also according to them the law does not state that a person can be arrested for non-payment of debt.

The scammers would say that they are from the American Legal Services or other similar legal agencies, however according to the authorities such agency does not exist. In fact, the company name is now the name of a scam alert in the net.

Blacks are Just Not Into Payday Loaning

Pew Charitable Trusts say that those who borrow from payday loan stores are borrowing in order to pay for their ordinary living expenses and not borrowing for emergencies.

In the first series of the reports of Pew entitled “Who Borrows, Where They Borrow and Why,” it is stated that 81 percent of those who used payday loans to pay for costs could have avoided unnecessary expense if the short term loans with high interest rates were not an option.

There are alternatives for pay day loans that are more preferred by individuals: 44 percent say they prefer credit unions, 37 percent say they go for credit cards and 17 percent say they would much more rather get employer loans. There are 69 percent of first time borrowers that used payday loan for paying their liabilities like expenses for utility bills, credit cards and also for their rents and meals.

Most of the people who engage in payday borrowing are White females between the ages of 25 to 44 and African-Americans and four other brackets are also borrowing frequently. These people are usually renting a lot, earning less than $40,000 a year or those who are divorced or separated from their spouse.

Other findings of the survey include:

a) Payday loans in 2010 include twelve million Americans who apply in payday loan stores or online.

b) A payday borrower is usually in-debt for an average of about 5 months before they can pay off the whole debt.

c) A borrower usually gets eight loans and would spend about $520 for the interest that the loan covers.

The Center for Responsible Lending also had a research on payday loans and they have found out that the areas that have colored residents have clusters for payday loans. Also, the states that have the highest number of payday loan stores have about 10,000 residents that are African-American. These states are Alabama,Louisiana, Mississippi, Missouri, Nevada, South Carolina and Tennessee.

Other Solutions Aside from Payday Loaning

People are very intent in borrowing from payday loan stores and companies that they sometimes fail to connect the gap in their finances. Household income can never be maximized because before looking for alternative ways to pay bills which are both easier and cheaper individuals would rush to the nearest payday loan store and apply for a short-term money loan.

According to Turn2us the Consumer Credit Counseling Service (CCCS) survey says that more than a quarter or 27 percent of those who take payday loans do not look for other solutions in getting money. And most of the individuals who are into pay day loaning are not checking their welfare benefits before they get loans.

Alison Taylor, the director of Turn2us says that challenges in financials can be very overwhelming for individuals and their families. People are hesitant to approach charities or get welfare benefits during hard times because they expect to have blunders involved with them.

According to survey 7.6 million people out of 13 million (more than half) are trying to get help from the government.Findings also found that more than half of those who have taken pay day loans regret doing so. 30 percent almost one third of the debtors have been financially worse because they took payday loans. 68 percent or two-thirds of those who took the payday loans in the past 12 months have taken more than just one. And 17 percent or one of six people has taken more than seven pay day loans.

Forty three percent of those who took pay day loans according to survey say that they needed the money before their payday. Twenty four percent say that they needed the money to pay for their basic necessities and by meals to feed their household. These respondents are those who are working full-time.

Instant Payday Loans: What You Ought to Know

Nowadays money is most essential in our everyday lives. It is very difficult to live an entire day without a single cent in your pocket. Every individual knows that it provides you with the power to buy what you want and what you are in dire need of.

If you are stuck in a situation wherein you are broke and you have a lot of bills to pay you may feel the need to borrow from a close friend or relative. However, when things come to worse and you have no one to turn to; then it might be wise to carefully consider engaging in payday loaning.

This can be the best solution for your liabilities payday loans are short term liabilities that only consists the borrowing of small amounts of money. But before you go on and decide to apply for this type of loan it would be wise to know how the business works. Your short term loan may only be less than $30,000 but the interest rates could be very high and can be the root of all the cause of supreme financial problems for you and your family.

If ever you need to get a loan then the best place to search is online. There are plenty of sites that have good and reliable market information about different companies that offer loans. These help sites may help you accumulate knowledge in how to instantly get loans for small amounts of money despite your credit standing.

Here is the list of guidelines you may find in the websites for potential payday loans:

a) payday solutions guaranteed for the United Kingdom;

b) how to actively find lenders that are trustworthy and stay informed;

c) the pros and cons of guaranteed payday loans;

d) how to successfully face and negotiate with the right guarantor;

e) the pros and cons of being a guarantor; and

f) information in how to accurately understand and use instant e-loans.