Payday loan scam is increasing everyday as payday loans are
becoming a popular and rapidly growing industry in the financial sector. This type of loan is popular because majority
amount of people who is obtaining this type of loan are usually in a financial emergency and it’s very easy to qualify. The same reason makes it easy to
perform a payday loan scam because the borrower does not get enough time to
research or go through the lender’s details.
Keeping the fraud companies aside sometimes even the
legitimate companies also scam people out of money in the name of different
service charge. As the whole procedure is completed online and there is no
physical appearance of these so called lenders therefore it is hard for
borrowers to segregate the good lenders and the scammers.
All the legitimate payday loan providers are approved by FSA
(Financial Service Authority). The loan providers who try to scam people out of
money would not have the authorization from FSA. Financial Service Authority in
UK always promotes responsible lenders and any company who is related with any
type fraudulent activity would be reported as scammer. All the loan providers
who have authorization would carry a seal of FSA on their website. Although
sometimes the scammers might put a fake seal on their website so it is
suggested by FSA to check up with them if there any doubt regarding the loan
provider.
There are payday loan scammers who represent themselves as 3rd
party loan provider or payday loan provider agent. They will gather all your
information and go to different loan providers for approval which may sound
great but there is always a possibility of disclosing your personal details to other
fraudulent parties. Sometimes these companies even sell client’s information to
other parties and they tell the clients all they are trying to do is getting a
loan from overseas banks. At the very
least you might sign up with them for a "Free Trial" and when that
expires they will be happily charge your account without your concern.
There is another common way a payday loan scam occurred by
offering an unsolicited loan by calling or sending email to the borrower. Most
of the time the victim gets the call of email after searching for a payday loan
online. After contacting with you they gathers all the personal information and
sometime charge you upfront with service fees and money wiring fees from your
account but you would not see any money deposited to your account.
The payday loan scam happens just by applying for a loan. The
scammer would tell you that you have a pre-approved loan and by filling out a
simple form you will receive the loan amount then they will charge you just for
filling out the form but would not get approved for the loan.
Therefore while applying for a payday loan you should be
aware of a few things that might help you to avoid any type of payday loan scam
and find the right and legitimate payday loan provider to help you in the time
of urgency.
