Payday Scams Use Harassment to Coerce Payment - Breach of Consumer Rights
From 2010 to 2012, a payday loan scam extorted millions of dollars from U.S. residents by threatening them with arrests or job loss. The calls came from India and over 2 million calls were made during this two-year period.
Those involved in the payday loan scam obtained information from payday loan websites and then used the information to call borrowers and relatives of the borrowers. This is why it is extremely important to make sure that you provide your information on a secure site that is encrypted to protect your private information.
The callers would claim they were with the government and demanded repayment for delinquent payday loans. Sometimes the fraudulent callers would contact relatives of payday loan borrowers and demand repayment to avoid arrest. The payday loan scam was so convincing - or, more likely, so intimidating - that many agreed to pay even if they knew they did not owe a payday loan.
It is easy to fall into a payday loan scam if you don’t know your rights and what a debt collector can legally do. Learn your consumer rights and avoid payday loan scams.
You Have Consumer Rights (Even if You Have Bad Credit and Owe Money)
According to the Federal Trade Commission’s Fair Debt Collection Practices Act, a debt collector (such as a payday loan lender):
- Cannot call the consumer (you) at any unusual place or time that would be inconvenient to you. Unless you let the debt collector know otherwise, they can only contact you between 8 am and 9 pm (your time).
- Cannot call you if you are being represented by an attorney (unless the attorney doesn’t respond to their calls after a reasonable amount of time).
- Cannot contact you at your work if they know that your employer would not approve of such communication.
- Cannot communicate with a third party (such as a credit counseling agency, attorney, creditor, etc.) without your consent, or the express permission of a valid court.
- Cannot communicate with you if you notify the debt collector in writing that you will not pay the debt or that you do not wish to be contacted any further. The notice will be considered complete upon receipt of the written notice. At this point, the lender can only contact you further to tell you they will no longer contact you and/or they will be taking other steps to obtain the debt.
- And a debt collector has no right, whatsoever, to partake in consumer harassment.
Consumer Harassment includes:
- The use of, or threat to use, violence to harm you, your reputation or your property.
- The use of obscene language, or language that is used to abuse you.
- Printing a list of consumers that refuse to pay debts (assuming you’re on the list, this could be embarrassing)
- Advertising the sale of your debt to encourage payment.
- Calling you repeatedly in an attempt to annoy, abuse or harass consumers (you).
- Calling without informing you which company the debt collector is with. (They can only evade this question if they are talking to someone other than you - to protect your privacy).
When a debt collector is trying to gather your information from a third party (someone other than you) they:
- Should not state the name of the employer, unless it is expressly requested.
- Cannot state that you owe money or are in debt.
- Cannot call the third party repeatedly, unless they believe the information the third party provided was incorrect and they believe the third party has the correct information.
- Cannot use postcards to contact you. (This would make personal information, such as being indebted, visible to the public).
- Cannot use any symbols or language on the mail sent to you that would suggest you are in debt or owe money. (So the mail cannot visibly be from a debt collector or debt collection company).
- If you are represented by an attorney, the debt collector cannot contact any third party other than the attorney.
These payday loan scams demonstrate the amount of abuse a consumer is willing to put up with. Perhaps it is because debt collectors are known for using abusive tactics, perhaps it is because consumers do not know their rights as a consumer.
If you believe you are being harassed for a debt you do not owe and you are in immediate danger, contact your local law enforcement agency.
If you believe you are being harassed for a debt you do owe, report it to your state Attorney General’s Office (www.ftc.gov).
The Federal Trade Commission also set up a webpage called, "Who's Calling? That Debt Collector Could be a Fake."
Learn more about your consumer rights on the Federal Trade Commission’s FAQ page.