Are Payday Loans Scams?

Scams involving payday loans may appear to be old news, but the reality is that more people are falling victim to them than ever before. With only our smartphones, laptops, and streaming devices keeping us connected to the outside world while we were holed up and on the verge of the side of the earth due to predators, we were right where they wanted us.

Simply put, con artists who prey on the financial industry are more prevalent and successful than ever. These fraudsters frequently target those who are most vulnerable to their schemes, and a sizable portion of their victims are those who have previously been denied a loan.

Because these loans should be avoided, we recommend payday loans without a broker. Customers can protect themselves from fraud by learning to recognise the visible suspicious signs associated with illegal lenders and taking other precautions to avoid doing business with them.

If you've had an unexpected bill crop up and are thinking about getting a payday loan to cover the cost, you might want to rethink your decision. Because, regardless of how burdensome that expense may appear to be, these high-interest, short-term loans could pose an even greater threat to your financial situation in the long run. There is a good possibility that there are more efficient ways to pay for unexpected costs.

However, here's the thing: even if you choose not to get a payday loan, there's still a chance that you'll wind up getting taken advantage of in some way. You got that right. If a con artist gets their hands on your information, they can try to collect on a loan that you never even took out. Here is how con artists that call you about payday loans make their money, as well as what you can do to fight back against them.

Again, What Exactly Is a Payday Loan?

People with poor credit ratings and, most of the time, lesser incomes are the target market for payday loans, which is a loan that does not require a credit check. They are often no more than a few hundred dollars in size and are intended to function as an "advance" on the borrower's next paycheck. Because the repayment date is typically scheduled for the borrower's following payday, they were given this name. Loans of this kind are also known as "cash advance" loans for essentially the same reason.

The typical duration for one of these loans is just two weeks, but the annual percentage rate (APR) can be as high as roughly 400 percent. This is due to the fact that the cost of a two-week payday loan with an interest rate of 15 percent charged at a flat rate works out to an average annual cost of 391 percent. These reasonable weekly prices eventually add up to a significant sum.

There are two different approaches that can be taken when applying for a payday loan. The first way is to physically go into a business that offers payday loans and fill out an application there. You'll be able to recognise these establishments by the massive signs that scream "quick cash immediately!" and "easy cash guaranteed approval" in front of them.

Payday Loans in Australia: Their Defining Characteristics

• The interest rates associated with payday loans are very high.
• Payday loan providers typically do not check the credit history of their borrowers.
• The terms of payday loans are typically very short.
• The restrictions range anywhere from $300 all the way up to $5,000.
• In Australia, getting a payday loan requires proof of regular income.
• Additionally, you need to be at least 18 years old to be eligible.
• Lastly, you must be an Australian resident with a valid checking account.

After explaining what a payday loan is and how it works, I'll explain how to secure a legal, low-interest loan in Australia.

Find Out How to Stay Away From Loan Scammers

If you live in Australia and are in need of a payday loan, you should investigate the lenders that you discover online to see whether or not they hold a valid licence. You will be protecting yourself from scammers by so doing.

Scam artists can contact you via phone call, text message, or email and pretend to be interested in lending you money. Hence why we kindly ask that you refrain from clicking on the links or providing them with any personal information.

Because of this, it is quite necessary to confirm any information that you obtain on a lender. Read this article to understand how to spot a dishonest lender and protect yourself from getting ripped off.

Licensed lenders have an obligation to comply with the standards set forth by the Australian Securities and Investments Commission (ASIC) in order to safeguard their customers' interests.

The spread of the epidemic has coincided with a rise in scams.

As more and more Australians fall prey to schemes that cost them more money, the Australian Securities and Investments Commission (ASIC) has refocused its attention on protecting consumers.

According to the Australian Securities and Investments Commission (ASIC), the fact that so many Australians are struggling with lower salaries and increased financial stress makes the "significant rise" in these scams even more concerning.

This year has seen "a significant surge in frauds," according to Delia Rickard, deputy head of the Australian Competition and Consumer Commission (ACCC), who spoke with The New Daily.

She stated that we are seeing a lot of investment scams, an entire handful of COVID-19 scams and that we have gotten approximately 3000 complaints regarding scams with a COVID connection.

Australians are so desperate that they risk going further and deeper into debt.

The rise in unemployment and the accompanying decline in salaries mean that many households are no longer able to pay their obligations. Scams are not the only cause for concern.

Numerous people will go to extreme measures, such as maxing out their credit cards or resorting to payday lenders, in order to ensure that they and their families have enough money for food and shelter.

According to Maura Angle, director of community engagement for the National Debt Helpline, these debt-based products, unfortunately, have the potential to "push them over the financial edge."

When people are low on cash and having trouble paying their bills, they are more likely to succumb to the temptation to employ buy-now-pay-later schemes and payday lenders. This is a problem for many people.

When money is tight and bills keep piling up, it can be tempting to take out a payday loan or max your credit cards. However, doing either of these things can quickly lead to a downward spiral of debt that can be difficult to escape.

The Stop the Debt Trap Alliance, which is a collection of more than 20 consumer action groups, conducted research that indicated the interest repayments on these short-term loans can amount to as much as 400% per annum. This is an extremely high rate of interest.

Because the repayments are so expensive, many customers are obliged to either prolong the duration of their loans or take out additional financing in order to keep up with the payments.

What Should You Do if This Occurs to You?

In the event that you suspect a con artist is behind the calls you've been receiving, the first step is to stop responding. When a debt collector is on the other end of the line, don't even bother picking up the phone. The number may be blocked from calling you again if you use a mobile phone. If this is not the case, you should refrain from picking up any additional calls from that number. Don't bother returning calls from these scammers who may leave a voicemail; instead, erase the message and ignore it. There is no need to worry, even if you are being threatened with jail time or fired from your job. Neither of those threats can be enforced by any debt collection agency, legal or otherwise. You can no longer go to jail for failing to repay a payday loan because debtor's prisons were done away with a long time ago. They also have no power to garnish your wages without going through the proper legal channels first.

This Is How the Payday Loan Phone Scam Operates

When you apply for a loan online, you don't always wind up on the lender's website. In many cases, you'll end up on a third-party site.  Your application will actually be sent to a "lead generator," which will subsequently sell your data to various lenders.

A record of your application, including your personal information and the amount you requested in a payday loan, will exist even if you don't wind up getting one. Scammers may wind up purchasing that information.

Once they get your number, they will phone you to try to collect a bill you never incurred. They put on the persona of a worker at a payday lending company and act as if they work there. Because it is usually unnerving to receive a call from a lawyer, some of them will even indicate that they are a lawyer representing the firm when they call. It's also possible that they'll pretend to be from a government agency.

The harassment and threats will start as soon as they get a hold of you on the phone. Scammers will resort to all sorts of intimidation techniques to get their money from you. They will get angry, possibly swear at you, and threaten legal action, wage garnishment, or account closure if you don't pay up.

They will threaten to contact all of your friends, family members, and even your work in an effort to intimidate you into making the payment. It's possible they'll threaten to call the police on you. They are going to exert as much pressure as they can on you in order to get you to pay them. It is an example of blackmailing a person who has never committed any act that would be worthy of being threatened in the first place.

In doing so, you are preventing yourself from falling victim to a payday loan scam.

Keep in mind that these other individuals do not have an advantage over you in any way. To frighten you, they are putting on a tremendous performance. No matter what they try to do to you, you may avoid harm by standing firm and refusing to give in. Nothing but empty threats.

Your first step should be to request official documentation of the debt. Scammers can be identified by their refusal to present an ID when they call. In addition to this, if they do give you a written record, you can compare it to the records you have kept on your own. Getting a free copy of your credit report is one way to check if this collection alert has been included.

Then, you should request any and all data the company possesses. Collect the caller's name as well as the name of the company they represent. Obtain their phone number as well as their mailing address. Scammers don't want you to look them up, so they won't volunteer this info. If you put in a little bit of effort, you'll be able to determine whether or not they're a legitimate business. On the other hand, legitimate debt collectors will eagerly provide it up for your inspection.

Even while you should be gathering all of their information, you should not give any of your own personal information to them. This piece of advice applies to any and all types of phone cons. If you get a phone call from someone, you should never, under any circumstances, give them your personal information, including account numbers and social security numbers.

If the fraudster does not succeed in convincing you to pay the bogus debt, they may still be able to take your identity. Do not give in to their demands simply because they are trying to intimidate you. Keep your ground and put up a fight.