It's a sad fact: scammers are still trying to take your money, when all you want to do is deal with your financial problems and try to get ahead a little. Here are four common scams you may run into, that are specially targeted at people who are dealing with bad credit.
"We'll Give You a Loan, But There's A Fee First..."
A company offers to give you a loan, but wants you to pay them a fee before they can release the money. For normal payday loans or short-term loans, remember: you receive the money first, then you pay the company back. Some scammers collect your fee and simply vanish, never offering you a loan at all. Others may actually give you a loan, but you spent money on an "application fee" or some other charge that wouldn't have been necessary, because payday lenders and bad-credit lenders are clamoring for your business all over the internet. Yes, if you have bad credit, they'll charge you more than if your credit was perfect, but that charge is built into the fees you pay after you receive the loan, not before.
How not to be scammed: This one's easy. Don't pay out any money before you receive a loan. Watch out if a company wants you to call a 900 number too, because they'll charge your phone bill. Look for a lender that doesn't expect any payment before giving you your loan.
"You're Going to Jail."
Somebody calls and says you've embezzled money, written a bad check, committed fraud, or are going to be arrested. What they're actually doing is collecting a past-due payday loan or some other loan, and they're trying, illegally, to get you to put them at the head of the line to be paid. They may claim (or strongly hint) that they're calling from a law firm or some official agency. If you actually committed fraud, I expect that you know it. But if the worst thing you did was not pay back a loan, yes, you might be sued, but in civil court, not criminal court. Debt collectors can lie very convincingly, though.
How not to be Scammed: Check out this post for more information on the laws that debt collectors have to obey and how to deal with the ones who don't: I Can't Pay Back My Payday Loan. Will I Go To Jail?
"Surely you remember that debt from 2007..."
It's bad enough when debt collectors call because you actually owe money, but the worst scammers call people who don't even owe anything. Their game is to bluff you into believing you took out a payday loan several years ago and haven't paid it back yet, hoping that you'll believe them or mistake them for a genuine lender that you do owe money to. They'll be especially aggressive, threatening arrest or other dire things, and wanting you to pay right there on the phone with a credit card or by authorizing a withdrawal from your checking account. They may even have some information about you that makes them sound more real, such as a social security number.
How not to be scammed: Don't pay over the phone. Take the time to find out if the debt is real. You won't be arrested (see the scam above), so there's no hurry. Tell them that you don't believe you owe the debt and to send information about it in writing, as required by the Fair Debt Collection Practices Act. Ignore anything else they say. If they're legitimate and they do send a letter, you can take the time to figure out if you really do owe the money. Scammers will hopefully see you're too hard to fool and move on to the next target. If you can get their phone number or name and you know the debt isn't real, report them to the FTC or your state attorney general, though the real scammers will give out false information and may even be calling from overseas.
"Send Me a Little Money and I'll Send You a Lot."
This scam comes in all different forms. Clever people work hard to find new ways of disguising the fact that you'll be sending them real money in exchange for money that never arrives. There are the outright thieves, who never intended to send you the inheritance or the government grant, and simply disappear once you wire them the money. Then there are the legal companies that sell bad deals, with careful hype.
How not to be scammed: Be especially suspicious of any deal that requires sending money by an untraceable method, like Western Union or courier. Check out a company's reputation online to see if others are happy with them. Make sure you read closely and want to buy exactly what they're selling, and not what you think they're selling. For example, are they sending you a government grant, or information on how to apply for a government grant?
Pay more attention to what's written than what somebody says. Long after the high pressure sales are over, you'll be bound by what you signed. Don't sign anything with blank spaces. Treat "electronic signatures" just as carefully as handwritten ones. If you're relying on terms on a web page, print out a copy just in case. But this goes both ways, too: if a company promises something in writing, hold them to it. "No upfront fees" in an advertisement means just that, for example, so back away if they start demanding money before performing services.
The hardest part of avoiding scams is not giving in to promises of easy solutions. By being skeptical and not falling prey to scare tactics or high-pressure sales, you can sort out the deals that are good, from the deals that are too good to be true.
10:05 p.m. March 19
The FTC just levied a fine against Advantage Credit Repair for promising to remove items from people's credit reports that were actually true, for not giving them refunds as promised, and a few similar things.
10:49 p.m. March 19
What I hate is U file a compliant with the ftc an they dont actually do anything for U they just say they look into it when they get enuf compalints.
11:31 p.m. March 19
seems like you have more luck with your state attorney general as far as actually getting something done. they'll usually send out a complaint letter for you.
8:23 a.m. March 20
Somebody needs to do something like the 419-eaters except to these sleezeballs
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