InvestigateTV – Payday loans are high-cost, short-term loans that are often a quick way for people to get cash before their next paycheck. Unfortunately, payday loan scams have cost consumers nearly $500,000 this year.
Josh Planos with the Better Business Bureau said the scam occurs when bad actors pose as representatives of legal payday loan companies.
Planos explained that scammers will offer fake payday loans or trick customers into thinking they still owe money on a debt even after the debt is paid.
These scams typically cost victims an average of $1,000 per person and their frequency is increasing.
Planos reported that the BBB saw a 27% increase in payday loan scams from 2019 to 2021.
Senior Counsel Mark Glassman with the Federal Trade Commission said the rise in payday loan scams means borrowers need to stay on high alert.
Glassman noted that the scams target people who, in many cases, are already economically vulnerable.
Experts said one way to avoid falling victim is to skip the payday loan and instead try to work with your creditors to make payment arrangements.
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