How to protect yourself from payday loan scams |
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Are payday loans a scam? What to watch out for

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You can find reputable payday loan lenders. But watch out for scams that prey on those who need quick cash.

If you’re desperately short on cash, you may be thinking about a payday loan. You may also have a lingering question on your mind: Are payday loans a scam?

Let’s take a look at why payday loans have a less-than-stellar reputation, as well as which scams you should watch out for. Finally, we’ll discuss how you can get a legitimate short term loan.

Are all payday loans scams?

Not all payday loans are scams — there are legitimate lenders that will extend credit to those in need.

However, payday loans can be extremely expensive, and this may be why they’ve acquired reputations for being scams. On average, you’ll pay $15 to $30 per $100 you borrow, which calculates out to at least a three-digit APR.

Payday loans are also notorious for trapping consumers in endless debt. Because these loans are so expensive, borrowers often have trouble paying them off, often causing them to take out more payday loans to pay off their debts.

All this said, there are payday loan schemes that really are scams. To protect yourself, you’ll want to know what to watch out for.

How do payday loan scams work?

Like many financial industries, the payday loan industry has scammers that prey on desperate people. Most scams revolve around consumers unwittingly giving out sensitive information or sending money to unscrupulous individuals.

Here are three payday loan scams and how to avoid them:

  • Upfront fee

    A company posing a lender will guarantee you a loan if you pay an upfront fee first. The company may ask for the money to be sent as a wire transfer, money order, gift card or some other form that’ll be hard for you to get back once sent. After the company receives the upfront fee, they’ll disappear without giving you the loan they promised.

    To avoid this scam, don’t give any money to a lender in order to get a loan. Legitimate lenders do not charge fees before you’re approved for a loan. Any one-time fees for establishing the loan should only be charged after you’re approved and have received your funds. Also, be wary of guaranteed offers. A legitimate lender cannot guarantee a loan without seeing your full application.

  • Payday loan collection

    In one common payday loan scam, someone will call you claiming to be a debt collector. They may threaten you with legal action or arrest if you don’t pay. The caller may also have your personal details — your bank account number, for instance, or even your Social Security number. Having this information doesn’t mean the call is legitimate. More likely, it means that someone else sold your information to a third party.

    Don’t give out any personal information over unsolicited calls, and don’t send money to anybody claiming to be a payday loan collector. If you do currently have a loan, call your lender directly to verify the terms of repayment.

  • Fake online form

    In some scams, you’re asked to fill out an online form to receive a payday loan. After you’ve entered your bank account information, the operators of the website won’t actually extend a loan to you. Instead, they’ll enroll you into some type of membership program that will take money from your bank account.

    To avoid falling prey to this type of scam, thoroughly vet any payday loan website you’re thinking about using. And read all of the fine print to make sure you understand it.

How to protect yourself from a payday loan scam

  • Compare multiple payday loan operators. It may be difficult to gauge the legitimacy of one payday loan website by itself, but you may be able to spot red flags when you look at multiple websites.
  • Look for information and reviews online. Negative information (or even the lack of information) online can point to a payday loan scam at work.
  • Be wary of unsolicited phone calls. Don’t accept a payday loan offer through the phone — there’s probably a better deal elsewhere. Additionally, there’s no way you can verify the legitimacy of the caller.
  • Understand the laws governing payday loans in your state. Many states heavily regulate the payday loan industry, and in a few states payday loans aren’t legal at all. Knowing the laws will help you gauge whether a payday loan operator is legitimate or simply trying to scam you.

In which states are payday loans legal?

Where to get a legitimate short term loan

If you’re set on taking out a payday loan, check with the Better Business Bureau to make sure the lender you’re considering is legitimate. Also contact the lender and ask for their physical address and phone number. If a lender is legitimate, they’ll freely give identifying information about themselves.

Here are some reputable lenders you can consider for a short term loan:

Rates last updated February 19th, 2019
Unfortunately, none of the short term loan providers currently offer loans in your state. Learn more about short term loans in your state to find an alternative.
Name Product Product Description Max. Loan Amount Turnaround Time Requirements
OppLoans Installment Loans
Installment loans with competitive rates from a top-rated direct lender.
1 business day
Must have direct deposit and meet minimum income requirements
CashNetUSA Loan
Apply for a short-term loan with an easy online application and dedicated customer service.
Varies by state
1 business day
You must be a US citizen or permanent resident, be at least 18 years old and have regular income and a bank account.
Jora Installment Loans
Installment loans with repayment terms up to 30 months, depending on your state.
1–2 days
Must have an active checking account, regular source of income and email address.
CashUSA Installment Loans
A connection service for quick cash loans up to $10,000.
As early as 1 business day
Must have a monthly income of $1,000+ after taxes and valid checking account.
LendYou Short-term Loans
Apply online with this loan-connection service offering unrestricted short-term loans with fast turnaround.
1 business day
You must be a US citizen or permanent resident, age 18+ and have a regular income.
ACE Cash Express Short-term Loans
Quick payday, installment and title loans with no prepayment penalty and a 72-hour satisfaction guarantee. Funds can be loaded on an ACE Elite™ Visa® Prepaid Debit Card.
Varies by state
Generally receive the money the next business day
Must be 18+ years old, have a steady source of income and a checking or savings account. Must not be a debtor in bankruptcy.
LendUp Payday Loans
LendUp offers $250 loans for first-time borrowers. Good credit is not required. Visit the site to see more details for your state.
generally receive the money the next business day
Be 18+ years of age and have a checking account that can accept electronic transfers.

Compare up to 4 providers

Payday loan alternatives

Even if you need cash right away, a payday loan isn’t your only option. There are other types of loans that can help you with your cash shortfall. (For example, a personal loan can be a great choice, as it typically come with reasonable interest rates.)

Because payday loans can be very expensive, it can be a good idea to consider alternatives. You could ask friends or family for help, get a loan from a credit union or even negotiate bills with your creditors.
8 payday loan alternatives to consider

Look at these factors before taking out a loan

  • The fine print. Before taking out any loan, you’ll need to agree to a lender’s terms. Take your time and read the fine print before agreeing to anything. If there’s anything you don’t understand or find objectionable, don’t be afraid to ask questions or look elsewhere for a loan.
  • The interest rate. A reputable lender will tell you a loan’s interest rate up front. Once you know the rate, you can calculate how much you’ll pay in interest. Consider the future and think about your ability to repay the loan.
  • Fees. Make sure you understand any fees you’ll pay to take out a loan. Some lenders add hidden fees to their loans, so confirm the total amount you’ll pay before you agree to anything. For example, some payday loans may come with fees for loading funds onto prepaid debit cards.

What to do if you've been scammed

Sometimes it can be hard to tell a scam from the real thing. If you think you’ve been scammed, there are steps you can take to protect your personal information and your money from being stolen.

  • Contact the police. Your police should have a non-emergency number that you can call when you know you’ve been scammed. File a police report in order to legitimize the situation. Your bank and credit bureaus will want to see that you’ve taken this action, so it’s an important first step.
  • Contact your bank. Since even legit lenders will ask for your bank account information, you may have given this to a scammer. Even if they haven’t stolen anything from your account yet, putting your bank on alert will help them track your account for any unusual activity.
  • Contact the Social Security Administration (SSA). If you’ve given out your Social Security number to a scam artist, you’ll need to contact the SSA as soon as possible to prevent identity theft.
  • Contact the top three credit bureaus. They can put a freeze on your credit report in case of any suspicious queries pop up. This will help prevent future damage from scammers trying to use your credit to buy expensive items.
  • File a complaint with the Federal Trade Commission (FTC). This can help the FTC and other agencies track fraudulent behavior and prevent other scams in the future.
  • File a complaint with your State Attorney General. Your State Attorney General will note the scam and attempt to make a case against the perpetrators. If you’ve been scammed, reporting it could help find who did it and have them answer to the law.

These steps might not be able to get you your money back, but they will make a dent in the ability for scam artists to function in the future while helping you protect your identity. The best way to prevent a scam is to know what one looks like, so familiarize yourself with this page in order to know what to avoid in the future.

The bottom line

There are reputable payday loan lenders, but there are also many disreputable companies in the industry as well. Be sure to do your research and thoroughly compare your options for a short term loan before applying.

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6 Responses

  1. Default Gravatar
    GloriaSeptember 6, 2018

    Is Speedy Cash licensed to do business in the state of VA?

    • finder Customer Care
      JhezelynSeptember 7, 2018Staff

      Hello Gloria,

      Thank you for your comment.

      Upon checking, yes, Speedy cash is licensed to operate in VA. Kindly refer to our Speedy Cash page for more details about this lender.

      Should you wish to have real-time answers to your questions, try our chat box on the lower right corner of our page.


  2. Default Gravatar
    MicheleApril 11, 2018

    I have taken an internet payday loan out on the past. I have repaid most of them off according to the contract and some I had to settle the lender, but paid eventually. My family, my work and myself all receive harassing phone calls from a 3rd party. I’m sure my information has been sold. It’s very embarrassing, the cycle seems to be never ending. How do I stop this?

    • finder Customer Care
      JoshuaApril 12, 2018Staff

      Hi Michele,

      Thanks for getting in touch with finder.

      I’m sorry to hear about your situation, Michele.

      If you have already paid all your outstanding debt, then there’s no reason for the lender to continue bothering you. Usually, if a borrower isn’t able to pay, they are endorsed to a collection agency which might explain why you are getting a phone call from a 3rd party. Here’s what could happen if you don’t pay back your payday loan.

      The best way for you to stop people from harassing you is to pay off your balance. Now, you mentioned you already paid them. In this case, you need to directly get in touch with your lender and inform them that you already paid your dues. They should be able to fix the problem.

      Each state and city has its own laws regarding payday loans. If you’re being harassed by a collection agency, your most important step is to become informed about your rights and obligations under the law, including what agencies can and can’t do when trying to collect the debt.

      When dealing with a collection agency, know that they’re trying to scare you into paying whatever you can. Instead, stand firm when dealing with these aggressive collectors.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  3. Default Gravatar
    MarguretteAugust 19, 2017

    I was excepted for a loan this loan company put x amount of dollars in my account then wanted me to get some cards with that money to get my loan I refused to do it this amount is still in my account what do i do with it?

    • finder Customer Care
      MariaAugust 19, 2017Staff

      Hi Margurette,

      Thank you for your inquiry.

      It would be best to contact your bank and confirm if the check deposited from them was a legitimate check. If the loan was received via direct deposit, you can contact the lender and find out how to pay it back directly without purchasing cards.
      Always be wary of any loan pitched over the phone and if they ask for anything outside of their terms.

      Should you later need a legit payday loan, you may check out the lenders found on our page on Short-Term Loans.

      I hope this helps.


US Payday Loans Offers

Important Information*
CashNetUSA Loan

Apply for a short-term loan with an easy online application and dedicated customer service.

Check into Cash Payday Loan

With 1,000 branches in 30 states, get $50 to $1,000 in days from this direct lender.

OppLoans Installment Loans

Installment loans with competitive rates from a top-rated direct lender.

LendYou Short-term Loans

Apply online with this loan-connection service offering unrestricted short-term loans with fast turnaround.

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