A RISE IN SHORT-TERM LOAN SCAMS
Over the past few years, a growing number of loan and debt collection scammers have targeted consumers throughout the country, using the names and reputation of legitimate, respected lenders to collect money or personal financial information from unsuspecting victims.
Scammers contact consumers claiming that they have been pre-approved for a loan, and then ask them to purchase a prepaid debit card or wire money as a "processing fee" or "good faith deposit." In other cases, these con artists seek to collect on fictitious "unpaid" short-term loan debt, often threatening arrest or legal action or demanding personal financial information over the phone. Some have gone as far as sending fraudulent loan documents using the Advance America logo.
Legitimate lenders are highly regulated at both the state and federal level and never use the kind of fraudulent and illegal tactics employed by scam artists. To help protect consumers from financial fraud, Advance America issues consumer alerts in areas reporting high levels of scam activity and works directly with federal and state officials to stop these scammers.
Through these efforts, Advance America educates consumers about ways to identify the warning signs of financial fraud, including sharing tips for avoiding loan and debt collection scams.
The signs of a scam
Federal law strictly regulates how real bill collectors and loan agents can do business. The federal Fair Debt Collection Practices Act (FDCPA) explicitly prohibits debt collectors from being abusive, unfair or deceptive in trying to collect a debt. Debt collectors cannot threaten consumers with arrest or jail time if they don't pay their bill. If someone claims a consumer will face criminal prosecution unless they immediately wire the collector or lender money, it's almost certainly a scam.