Improved state and federal laws have reduced the rate of predatory lending by most brick and mortar payday loan companies, but online payday loans operations continue to pose a risk for fraud and identity theft.
Somewhere out there, scammers have enough of Kathy Pope's information to try to shake her down.
The phone scam targets people who applied for pay day loans or received and repaid the loans years ago. Pope recently received an email from one of her supervisors- about a message from a man named Rhyan. ( Debt collectors are not supposed to call your employer.) Not suspecting a problem, she returned the call.
"You have an unpaid pay day loan. and I said, I do? And he said from 2008 and I said 2008?" Pope said.
She said the man told her she owed more than $1,600 in principal, interest and late fees on a $305 payday loan from nearly 6 years ago.
"Well I knew right then something was up," Pope continued. "Payday loan companies don't wait years to collect their money. They don't even wait 30 days to contact you if you're late."
Pope said "Rhyan" refused to provide any documentation about the debt, and made repeated threats about taking her to court, which is illegal.
"And he said 'Well, we are going to be serving you with legal papers, either at your work, or at your home," Pope explained. "That I would get served with papers and I would have to go to court."
In many cases, debt collection scammers pose as police- or threaten to send police to arrest you and have you thrown in jail. The State Department of Financial Institutions says payday loan collection scams are growing.
According to DFI Director of Consumer Services Deb Bortner, most scam targets have started an application process for a payday loan online. Many change their minds and don't go through with the loan, opting to go with a brick and mortar payday lender instead. But all the online information is gathered by what are called lead generators- who sell the information to a variety of payday loan businesses- including, perhaps unknowingly, to bogus collection agencies.
Bortner says the growing threat of payday loan collection scams, along with the growing problem of illegal and unlicensed offshore internet lenders- make it crucial for you to be cautious about online payday lenders- and know your debt collection rights: Collectors cannot call you at work. They cannot make legal threats of any kind. And they must provide written documentation of all debt they're trying to collect.
"You say I owe you money. Show me something!" said Pope.
She says the scammer finally hung up after she asked him a string of pointed questions and shot down his answers and attempts to intimidate. He finally realized Pope wasn't born yesterday. Turns out she a municipal court clerk who has worked in law firms for 25 years.
If you have a concerns about a specific debt collector's activities, file a complaint with the Federal Trade Commission and the State Attorney General, as well as DFI. And if the suspicious or fraudulent activity involves the internet, cell phone or any wireless technology- also file a complaint with the Internet Crime Complaint Center, also known as IC3. Finally, before you apply for any pay day loan, make sure you understand the laws regarding payday lenders.