BBB warns of predatory loan scams, offers tips to protect consumers

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The Better Business Bureau (BBB) is warning consumers about the dangers of predatory loan scams.

According to the BBB, a recent study shows that between 2019 and 2021, the scam tracker received more than 7,800 reports about loan and debt collection scams, which represented more than $4 million in losses.

Scammers posing as payday loan companies or debt collectors use stolen financial information to convince customers to pay using tough-to-trace sources like gift cards, payment apps and money orders.

“Never pay any fees up front, also read the fine prints of any contract and make sure your payday lender if you’re using one is licensed in the state of Minnesota,” said Bao Vang of the BBB.

Here are five ways scammers try to lure you in:

  • Steal information about payday loan customers.
  • Scammers offer take payday loans, or pressure customers into believing they still owe on debts.
  • They also pose as debt collectors.
  • Scammers may also ask for payment through hard-to-trace sources such as gift cards, payment apps and money orders.
  • They may also threaten legal consequences if you don’t immediately act.

The BBB says consumers should look out for the following:

  • Unexpected calls to apply for a loan or collect debt.
  • Loan offers that ask for a fee ahead of a loan.
  • Short-term interest rates comparison.
  • The handing over of any personal information, including bank account information.

If you think you’ve come across a scam, CLICK HERE to report it to the BBB.