Preying on people who are in need of payday loans is a very low form of scam, but it's also disturbingly common. It's important to educate yourself about the types of scams you may be exposing yourself to so that you can avoid them when you get your payday loan. Here are three types of scams that you may encounter when you're seeking a payday loan.
1. Telephone scams
These scammers may get into your confidence and then get personal information from you. A common form of this scam type is when the scammer will call you on the phone claiming to represent a payday loan company and, on this false pretense, convince you to give out your information to them. They can then use your information against you, blackmailing you into paying them money. Another approach is to first obtain your information some other way and use it to convince you that they're a legitimate debt collection agency, thus persuading or intimidating you into sending your money to them.
2. Identity Theft
Of course it's important to give out identifying information to anyone who's lending you money, otherwise they'd have no guarantee that they'd be able to get their money back or even find you again. However, some scams take advantage of this by pretending to be a payday loan company just in order to get personal information from you so they can then impersonate you. This form of identity theft is especially likely if you're using an online payday loan company. Online information can often be hacked from databases, and these types of companies are frequent targets of such hacking.
3. Fake fees
A disreputable company or scam impersonating a payday loan company can pretend to offer you a loan and then trick you into paying them instead. They may do this by telling you that you need to send them "insurance" money and then keep charging you unnecessary fees until you've paid them more than the original amount of the loan (which of course you'll probably never receive in the first place).
After reading about these three payday loan scams, you'll be better equipped to resist any attempts to scam you. However, these types of scams are just some of the ways you can lose money on a payday loan. Make sure you do plenty of research on not only the payday loan company you select, but also on typical payday loan fees and interest, so you're ready to get the best deal on your loan. For any loan, be sure to visit reputable establishments, such as Weyco Community Credit Union, to ensure your financial safety.