FBI Draws Attention to Payday Loan Schemes

FBI warning to payday loan users: Watch out! The FBI is warning that some payday loan users are being defrauded by callers claiming to be representatives of the FBI, law firms or other legitimate law enforcement agencies and demanding repayment of actual or imaginary loans to avoid legal consequences.

The FBI advises borrowers targeted with such calls to notify their bank, major credit bureaus or local law enforcement agencies immediately. They are also advised not to give out or confirm any personal information when asked for by these callers.

According to the Agency, these payday loan fraudsters have gathered extensive accurate information about their targets and use them to repeatedly contact potential victims and, in some instances, threaten them with arrests and prosecutions.

Payday loans small, short-term loans made to borrowers who need immediate cash to cover expenses until their next payday up to 30 days. Typically, these loans attract high interest rates of up to 400% per annum.

Recently, these high-cost loans have incurred the wrath of the public and law makers. In the last few years, for instance, many states have either outlawed payday loans outright or enacted laws limiting their use.