The bills need to be paid and you don't have enough money. A short-term payday loan may seem like the only option to get you past the crisis.
These days, payday loans are just a mouse click away. And some of the offers are mighty tempting: a "guaranteed" loan without a credit check.
Better watch out: This could be a set-up for a scam.
Because of the exorbitant interest rates, payday loans are never a good deal for the borrower, but using an unknown online payday loan store can be even worse.
According to the National Consumers League's Fraud Center, scammers are creating bogus payday loan sites to snag their victims. These sites look completely legitimate. Some even have fake video testimonials to instill confidence.
After the application is completed, the soon-to-become victim is contacted by the scammer who has good news: The loan can be processed as soon as they wire money to cover the taxes or insurance or application fee. All of these fees are bogus and should never be paid.
"Unfortunately, the loan never appears and the consumer is left holding the bag," said John Breyault, director of NCL's Fraud Center. "Even worse, the victims are asked to send more and more money to collect the fictitious loan. These scammers are very good at stringing you along and putting the pressure on if you refuse to pay any more."
The requests for payments normally continue until the victim catches on to the con or simply runs out of money.
Sade Wells of Philadelphia knows how convincing the bad guys can be. She needed money to move to a new apartment and applied for a $1,000 loan from an online payday loan store.
James Smith (you can bet that's not his real name) called and told Wells she was approved for the loan once she wired the company $245. She did.
Smith called again. This time he told Wells the loan had to be insured before it could be transferred to her bank account. That would cost another $375. So she wired off the money.
By the time Wells pulled the plug on this scam, she had wired the company $1,600. In hindsight, she realizes this was foolish, but at the time Smith assured her she'd get the money back with the loan.
"I'm mad. I'm late on my rent and I can't move now," she told me. "I'm hoping and praying that I can get my money back."
Unfortunately, that's not likely to happen.
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