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New phony payday loan collection scam threatens consumers

Post by John Gillie / The News Tribune on Feb. 26, 2010 at 12:59 pm with 2 Comments »
February 26, 2010 1:08 pm

A new collection scheme aimed at payday loan customers is threatening Washington consumers, says the Washington State Department of Financial Institutions.

The new phone collection scam threatens consumers with legal action or even arrest if they don’t immediately make good on a phony payday loan the collector claims they took out two years ago

The department says the phony bill collectors, who may claim to be attorneys, even target consumers who may never have received a payday loan.

Here’s how they operate, according to the state agency:

* Representatives of a company calling itself Financial Accountability Association make unsolicited telephone calls to consumers at home or at work. The scammers tell consumers that they are being prosecuted for loan fraud, bank fraud or check fraud because they have defaulted on a payday loan
* The scammers claim to be attorneys collecting a debt
* The scammers may threaten the consumer with immediate arrest
* The scammers usually tell consumers that they received a payday loan of several hundred dollars in 2008, they may tell the consumer that the debt has increased to several thousand dollars
* The scammers demand immediate payment of the debt by providing a checking account or credit card number
* If a consumer pays the scammers, they will continue to aggressively contact that consumer for even more money
* These scammers are highly persistent and may make dozens of threatening calls in a short period of time.

The company these collectors claim to represent, Financial Accountability Association, provides customers with a false address and phone number in California. The state says the scamers are not registered with the state and may be based overseas.

Here’s what to do, says the state, if you are contacted by phony collections agencies:

If you feel you have been a victim of a loan scam, please contact the Federal Trade Commission at 382-4357 (1-877-FTC HELP). Because the scammers have access to bank account information and social security numbers, victims should consider themselves victims of identity theft and take appropriate precautions. The Federal Trade Commission has information for victims of identity theft available on its Web site.

The federal Fair Debt Collection Practices Act says debt collectors must send consumers a written notice within five days of their first phone call, showing how much the consumer owes and where the debt is from. The law says collectors can not say or even imply that nonpayment is a crime.

They can’t call before 8 a.m. or after 9 p.m. Collectors are not allowed to speak to a consumer’s employer about their debt. They are prohibited from harassing or abusing consumers and they must stop calling if the consumer asks them to

Please note that these scammers are frighteningly well informed, very persistent and extremely threatening. Anyone who has been contacted by them should take steps to protect their personal financial information and treat this as a matter of identity theft.


Leave a comment Comments → 2
  1. Loans help in financing but the interests charged can make the borrowed money double or even more. This means a person loses so much money in trying to settle loans. Compared to other ways of getting money like savings it is cheaper to save than go for a loan.

  2. bethwmn says:

    I have used a payday loan, like they are meant to be used and it was cheaper then over drafts. I have gotten these phone calls and at first was a bit alarmed until I talked to a manager at Payday and he apoligized all over the place and assured me this was just a scam.

    now when they call I tell them the numbers they have are all wrong, and I tell them of course I have a lawyer and he/she is in touch with whatever payday loan company they are mentioning. I tell you, it really messes with thier heads! It has become quite intertaining.

    I ask them “how’s the weather in the Phillipines?” that makes a few of them actually stutter!

    Anyway, it may be annoying, but there is nothing to fear.

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