LAFAYETTE, La. (KLFY) – As many Americans are finding themselves in financial hardship, they are resorting to payday loans for short-term solutions.
Now, there has been a noticeable rise in the number of people being misled by loan companies and scammers making their problems much worse.
KLFY News 10 spoke with the President of the Lafayette Better Business Bureau Chris Babin on the issue.
He said, “Just over the past three years we have received over three thousand complaints about payday loan companies and hundreds of thousands of complaints about scams regarding payday loans and those types of debt collections.”
Babin said that payday loan companies and scammers are exploiting people in desperate need of help because they are not aware of what they are doing.
“There are interest rates in the triple digits to where when people are coming time to pay back the loan in thirty days or so, they are not able to make their payments.”
Badin told News 10 that because of this, they end up in a lot more debt than they were in to begin with.
The scam works by the scammer stealing personal information by pretending to be a debt collector and manipulating the customer into believing them.
Babin gave some advice to people who may be targeted.
“As a consumer, what we will tell you to be on the lookout for is unsolicited communication. If you receive a text, email, or phone call saying you are eligible for this money that should be a red flag,” he said.
“Also, any loans that require money upfront like advance fee loans should also cause a red flag to go up as well.”
The B-B-B conducted the investigation and is advising everyone to familiarize themselves with the payday loan industry.
They warn that people need to be aware of the red flags to prevent scammers and loan companies from taking advantage of even more Americans.