Consumer lending: USA sees upsurge in pay-day loans collection fraud

In a growing fraud, telephone calls are made to individuals claiming that the victim is in arrears under a pay-day loan and that legal and illegal consequences will flow if there is further default. But even more worrying is the amount of personal information the callers have about their victims

A warning from the IC3 says "The callers purport to be representatives of the FBI, Federal Legislative Department, various law firms, or other legitimate-sounding agencies. They claim to be collecting debts for companies such as United Cash Advance, U.S. Cash Advance, U.S. Cash Net, and other internet check cashing services.

"One of the most insidious aspects of this scam is that the callers have accurate information about the victims, including social security numbers, dates of birth, addresses, employer information, bank account numbers, names and telephone numbers of relatives and friends. The method by which the fraudsters obtained the personal information is unclear, but victims often relay that they had completed on-line applications for other loans or credit cards before the calls began.

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"The fraudsters relentlessly call the victim's home, cell phone and place of employment. They refuse to provide to the victims any details of the alleged pay-day loans and become abusive when questioned. The callers threaten victims with legal action, arrests and, in some, cases physical violence if they refuse to pay. In many cases, the callers even resort to harassment of the victim's relatives, friends, and employers.

"Some fraudsters instruct victims to fax a statement agreeing to pay a certain dollar amount, on a specific date, via prepaid VISA card. The statement further declares that the victim would never dispute the debt."

IC3 says that, persons receiving such calls do in fact have pay-day loans that they should immediately contact their financial institution to clarify the position.

Anyone, regardless of whether they have a loan, should "contact the three major credit bureaux to arrange for an alert to be placed on their credit record and report the matter to the FBI via, strangely, www.ic3.gov. If violence is threatened or anticipated, victims should contact their local police.