The Federal Trade Commission told KIRO 7 Consumer Investigators recently that people can actually lose money after applying for online loans.
It happened to a local woman, who didn’t want to be identified, but did want to tell her story to KIRO 7’s Amy Clancy.
She admitted she owes around $20,000 in debt; it’s because she's so behind on various payments that she accumulated from multiple payday loans she applied for online. The woman was approved for the loans and received the money, but it was when a man called to collect that she then became the victim of a scam.
“He knew everything about me,” the woman said. “He knew how many loans I had. He knew that I owed back taxes from 2010. He knew my employer information. He knew everything about me.”
Because she owed on multiple loans, the woman thought the caller was legitimate, even though she said he threatened to have her arrested if she didn't pay immediately; something a legitimate debt collector would not do.
“He said that he would file criminal charges for bank fraud,” she said. “He hung up and about 20 minutes later, a man calls me and identifies himself as a local sheriff, and he wanted to know if I was home because he had papers he needed to deliver to me.”
The woman then wired the money the man was demanding in two separate payments. She later learned none of that -- more than $2,500 -- went to pay off her loans.
Asked where the money went, the woman replied, “In his pocket.”
Kelly Hooper of Burkett & Burdette law firm in Seattle is the attorney the woman hired to help deal with her debt problems. Hooper said what concerns her is how her client's personal information could so easily be used against her.
“I don’t know if payday loans are selling that information or not,” Hooper said. “I’m not sure how the scam artists are getting it, but they’re getting real personal information.”
According to the FTC, that's exactly what some online loan companies, and others simply posing as lenders, do. Many sell the information, which, Bob Schroeder of the FTC said, is legal.
“They are doing that. Some of the online lead generation companies who simply get consumers’ names and addresses, who are interested in payday loans, they sell that information to anybody who will pay. And some of the people are total scam artists,” Schroeder said.
What isn’t legal, he said, is trying to collect on debts that aren't owed, and using threats to do it.
That’s why the woman we interviewed said she sent the money.
“It put the fear of God in me and I sent the money,” she said. “I didn’t question it.”
The woman and her attorney said there’s a big difference between the legitimate debt collectors they’ve dealt with and the scam artists. They said the legitimate debt collectors are usually willing to work with the debtor to set up payment plans. Scam artists aggressively demand money and often make threats.
The Federal Trade Commission has advised consumers to:
- Never give-in to demands over the phone.
- Ask for proof in writing that the debt is yours (and even then contact the company to confirm before paying).
- Keep track of your loans and who they are with so you'll be less likely to pay someone just trying to steal your money.
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