How to Avoid Payday Scams – F.T.C Provides Guidelines

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There may come a time when you are in desperate need for instant cash. The need can arise due to any reason. This is where you can go for a payday loan. Payday loans are preferred by millions due to the fact that they are easy to obtain and offer quick cash in your time of need. However, there are many who criticize the industry. This can be credited to the various unlawful actions carried out against individuals opting for quick cash.
Moreover, there are those who try to take advantage of your situation. This, in turn, leads you to becoming a victim of a fraud or scam. To eliminate this issue, the Federal Trade Commission (FTC) has provided a series of guidelines which can help you avoid falling for payday scams.

Stay Clear Of Unsolicited Loan Offers

Regardless of how desperate you are for cash, you will have to keep in mind that payday loans are one of the most marketed products online. There are various companies that will reach out to you through unsolicited offers in an attempt to entice you to apply for a loan. The problem at hand is that a majority of these offers are nothing more than phishing and spam sites. These sites do no more than spread malicious software or get a hold of your personal information, including bank account details. To be on the safe side, it is highly advisable to stay clear of these products.

Ensure That the Lender Is CFSA Sealed

The CFSA was established for the protection of the consumers and for the effective regulation of the payday loan industry. Also popularly referred to as Community Financial Services Association, the association is informed in all aspects related to payday lending. That being said, it is important for you to make sure that the lender you are dealing with is certified by the CFSA. This can be verified by checking for the CFSA seal on their website. Doing so will assure you that you are dealing with a legitimate loan company.

Legit Lenders Do Not Demand Upfront Payments

As easy as the process may seem, you will have to keep in mind that no legitimate payday loan provider will demand upfront payment for their services. There are cases when you will be asked to fill an application or even credit report fees. The amount however is deducted from the total sum you are borrowing after everything has been taken care of.

Verify the Lender through Their Physical Address

You will come across various scams posing as legitimate businesses online. They are willing to offer you falsified information and records to justify their authenticity. There are those who are in desperate need of money and without thinking, make mistakes which land them in a bigger mess than they are in already.

This makes it even more important for you to be careful while looking for a reliable payday loan provider. The best way to separate scams from the legitimate businesses is by verifying and locating their physical address. Real payday lenders do not solely operate online but have a brick and mortar location as well.

Look Out For Red Flags

While dealing with finance and personal information, you have to ensure that the lender you are dealing with is legitimate. For most, this can be difficult but not impossible. To be able to distinguish the real from the fake, you will have to look out for some obvious red flags. Such scams give out little to no information about themselves, no matter how legitimate they may claim to be. Moreover, they are not authorized to ask for your bank account information either.

Do Your Homework

Before dealing with any payday lender, it is of utmost importance to make sure that you do your research. You should know who you are dealing with to avoid becoming a victim. For verification purposes, you can always check with the Better Business Bureau or any other financial regulators in your state to get a better understanding.

Moreover, there are other alternatives by which you can determine if a business is authentic or not.

  • If you have received an email or something by mail, check out for spelling mistakes.
  • Genuine lenders mostly have information about you. Receiving an email or mail addressing a general audience rather than you in particular is a cause for alarm. It goes without saying that lending companies should know who they are dealing with.
  • Be wary of those companies that mention a time limit. Such a task requires time and patience. Nothing can ever be done immediately. Being asked to hit a deadline is always suspicious.
  • Consider the medium of communication being used to contact you. It would seem highly irrational to be contacted about loans through a text message. Such details need to be dealt with on paper or through email at the very least.

Stay Clear Of Offers That Sound Too Good To Be True

You will come across various offers online promising you exactly what you need in return for minimal requirements. Offers that sound too good to be true are not worth the risk. You should compare the offer with other reliable lenders. The purpose of doing so is to find proper justification. The offers can include lower interest rates than what’s being demanded by the lender you are considering.

After carefully reviewing the aforementioned aspects, you will have a better understanding of the possible threats you may come to face when looking for a payday lender. By taking each and every step as advised by the FTC, you will ensure that you do not become a victim of fraud, scams or identity theft. Finding a reliable company is not difficult. There are those who wish to take advantage of a better offer. Anyone making the effort is doing what anyone else would do. At the end of the day, it is only logical to save money in the process but not at the cost of being scammed.

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