Kentucky Department of Financial Institutions and Office of the Attorney General
Beware of Internet Payday Loan Collection Calls
FRANKFORT, KY (Oct. 7, 2010) — Attorney General Jack Conway and the Department of Financial Institutions (DFI) are warning consumers about calls from bogus collection agencies attempting to collect on illegal Internet payday loans.
Conway’s Office of Consumer Protection and DFI’s Consumer Protection Branch have received reports from consumers who have been contacted by bogus collection agencies for online payday loan companies. The callers have threatened Kentucky consumers with arrest, employer notification, wage garnishment, court actions, and physical harm to themselves or family members if payment is not made. These callers often use foul language and other scare tactics. Some consumers report that family members have been contacted.
“Consumers should be aware that online payday loans are illegal in Kentucky,” stated DFI Commissioner Charles Vice. “Using these illegal services subjects the consumer to the possibility of being scammed by the bogus collection agencies.”
Recently, a young woman in Louisville was contacted by a scammer who insisted that she would be arrested at work if she did not pay the loan. Even though she never received a loan, she paid the $350 out of fear. She believes the scammer accessed her information when she applied for a payday loan online.
“This scenario is typical of the complaints we receive,” said Attorney General Jack Conway. “Many consumers indicate they have never had an Internet payday loan, but may have inquired or completed applications online. Some consumers actually received an Internet payday loan, but have paid it off. Apparently scammers have accessed personal information, including social security and bank account numbers, from these payday loan websites.”
No Kentucky-based payday lenders are the subject of this media advisory.
If you are contacted by a collection agency for an online payday loan company:
- Do not give out personal information or send money that you do not owe.
- Tell the scam artist you are aware of your rights under the Fair Debt Collection Practices Act (FDCPA) and you request proof of the debt in writing. The Federal Trade Commission provides information sheets on the FCPA at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm.
- Check your credit report to make sure that no one has opened accounts in your name. Consumers may receive a free copy of their credit report once every 12 months from each of the three major credit reporting agencies – Equifax, Experian, TransUnion. Call 877-322-8228 or visit www.annualcreditreport.com.
Report suspected collection scams to the Federal Trade Commission at 877-382-4357 and to the Attorney General’s Office of Consumer Protection at 888-432-9257. If you have a complaint against a lending practices – either a legal brick-and-mortar lending store or an illegal Internet payday lender – contact DFI at 800-223-2579 or www.kfi.ky.gov/complaint/ficomplaint.htm.
DFI is an agency in the Public Protection Cabinet. It supervises the financial services industry by examining, chartering, licensing and registering various financial institutions, securities firms and professionals operating in Kentucky. DFI’s mission is to serve Kentucky residents and protect their financial interests by maintaining a stable financial industry, continuing effective and efficient regulatory oversight, promoting consumer confidence, and encouraging economic opportunities.
The Office of the Attorney General investigates consumer fraud complaints in Kentucky. Investigators also follow up on any reports the office receives from consumers who believe they have been victimized by companies or scam artists that have violated Kentucky’s consumer protection laws.