Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Mar 1, 2012

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The Internet Crime Complaint Center (IC3), which partners with the FBI and national White Collar Crime Center, has received call after call from people who feel they’ve been victims of payday loan telephone scams.  The IC3 investigates internet-related criminal complaints, and are taking these calls because the predators hiding behind their telephone’s claim to be representing payday lenders that borrowers found online.

According to the IC3, the typical payday loan scam involves callers who pose as representatives from the FBI, Federal Legislative Department, different law firms, or various debt collection agencies. The callers contact previous or current borrowers and claim the borrowers are delinquent on their payments. Borrowers are then threatened with legal action if they do not pay up on their debt.

The callers’ threats are then followed up by a barrage of calls to victims’ home phones, cell phones, relatives, and even places of employment.

Victims who comply with the predator’s demands often report handing over debit and credit information to the callers. Some callers then demand the victims take out a prepaid credit card to cover the remaining payday loan balance, and the callers then acquire the money on the prepaid card as well.

In some of the more sophisticated versions of this scam, some victims have even been visited by a live person claiming to be a delinquent payday loan processor. This person has been reported to show up at both a victim’s residence and place of employment.

If borrowers inquire about the payday loans they are supposedly delinquent on, the caller refuses to give any information on the alleged payday loan and instead becomes hostile, threatening, and abusive when asked, according to the IC3.

One former payday loan borrower named JanLaree Dejulius said she transferred $793 to a fake debt collector in April of 2010. The caller purportedly knew all of Dejulius’ personal information and details about the short-term loan she borrowed, which frightened Dejulius into believing the call was legitimate. Finally, when threatened with arrest, Dejulius wired the money over.

“I was intimidated enough not to want to get arrested, Dejulius said at a Federal Trade Commission news conference in Chicago.

While it’s not entirely known how the scammers are receiving current and former payday loan borrowers’ information, it is believed the fraudsters have hacked unsecure or illegitimate payday lenders’ websites, or gathered personal information from borrowers who unknowingly filled out fake forms and questionnaires online.

“They’re not going after anybody who has a lot of money,” said Dejulius of the scammers. “It seems like they go after the vulnerable.”

The IC3 warns the public that if they receive a call from somebody trying to collect a debt the recipient doesn’t owe, they should:

  • Contact local law enforcement agencies if they feel they are in danger
  • Contact banks and credit card companies and inform them their accounts and information may have been compromised
  • Contact the three major credit bureaus—Experian, Equifax, and TransUnion—and ask that an alert be put on their file
  • File a complaint at www.IC3.gov

If borrowers do currently have existing payday loans and a they receive a call from a debt collector, borrowers are urged to call the lender directly and confirm that the debt collector is legitimate.