Money is tight all around these days. While there are some signs that the recession is ending, there are still plenty of folks feeling the hit. This situation, unfortunately, leads to customers taking unnecessary risks.
One of the ways that consumers deal with immediate financial needs is with payday loans. These short-term loans give the customer cash today and that usually needs to be paid back within a couple of weeks. These loans have a high interest rate, but because they’re paid off quickly the actual fee can be less than other alternatives.
There are even online payday lenders. These payday lenders don’t require you to visit a payday loan store, but will take care of the payday loan process entirely online. These loans are convenient, and usually no more expensive than payday loans taken out in person.
Unfortunately, this kind of payday loan also carries a risk. If a consumer doesn’t do their research or isn’t careful, they might fall for an online payday loan scam.
Rose Banks of Maryland found this out the hard way. She was in debt, way over her head and unable to make ends meet. Banks turned to the Internet to try to find someone to lend her the money she needed to stay afloat.
What Banks found, however, was something nefarious. She found an offer for a $5,000 loan through a company named “Brunswick Financial Group.” The company said they were willing to offer her the loan, but that she needed to send in a deposit as a security.
Banks then wired $930 to a woman in Canada. Banks never got her loan.
This type of loan is known as an “advance fee loan,” and is illegal in many places. Customers all too often learn the hard way that, when you give someone money for an advance fee loan, there’s no way to guarantee that you’re going to get the money promised you.
One warning sign that you might be facing an Internet payday loan scam is that the lender doesn’t ask you for verifying information, such as permission to run a credit report or a copy of your paycheck stub. The Federal Trade Commission offers other advice to consumers about how to avoid these kinds of Internet payday loan scams, as well.
The good news is that there are plenty of legitimate Internet payday loan websites. You just need to be diligent about verifying the site before you enter your personal information, and never send an advance fee to a company who claims they’ll give you a loan.