How to Avoid Payday Loans and Personal Loans Online Scams

Samanta Nest
2 min readDec 10, 2018

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Scam alert: Alabama was attacked by scammers.

Not long ago Loans for Alabama residents were targeted by scammers who pretended to be representatives of Advance America, a national small-dollar loan provider.

How does this work?
First the scammers contact residents and offer approval for personal loans. In exchange they require payment through gift card codes. When the scammers receive the gift card codes, they become invalid. Frauds of this type often take the form of contact with residents. In this case, the scammers claim that the loans will be quickly approved if the respondent is ready to wire money as a “processing fee” or “good faith deposit”. If the respondent refuses to comply with previous actions, scammers try to get an “unpaid” small-dollar loan debt, often threatening arrest or legal action or demanding personal financial information over the phone.

Advance America claims that they have nothing to do with this. “Scammers often use the reputation of a legitimate, well-known business to trick their victims”, said Patrick O’shaughnessy, president and CEO of Advance America. “Legitimate short-term lenders like Advance America are rigorously vetted at the state and federal level. And such campaigns will never use fraudulent or illegal activities for profit.”

How to avoid scams:
All consumers should take the following measures to protect themselves:

Never share personal information (such as your bank account or Social Security number) online or over the phone. Firstly you have to check that you are working with a legitimate lender or bill collector. Before you apply for a loan, check the license of this company. All legitimate lenders will display their licenses on their websites to make sure they are fully licensed in your state.
Never transfer money or provide prepaid debit card information to an unknown lender. Perhaps this lender would argue you have been pre-approved for the loan and should make the initial payment as a “show of good faith”. Remember! Legitimate lenders don’t offer approval prior to application and don’t require good faith deposits.
Be suspicious of any unfamiliar e-mail with a request for personal financial information. If an email contains frustrating or exciting false claims, it’s most likely a scam.
Keep a record of all outstanding debts including the contact information of the lender.
Keep anti-virus and anti-spam software up to date on all your devices.
Check your bank, credit and debit card statements regularly. This will help to ensure that there are no unauthorized transactions. Similarly, check your credit report (using Experian, Equifax or TransUnion) every four months on a rotational basis; credit reports are often one of the first places where will be signs of identity theft or fraud.
If someone asks you to repay a debt, always ask them to provide written proof of the debt. This is the law requires! Especially if it’s for a fee you don’t recognize.

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