(Woodbury, NJ) - The Gloucester County Office of Consumer Affairs is warning residents about pay-day loans and has received complaints and concerns about fraudulent calls to consumers asking them to repay a pay-day loan they purportedly made, but indeed had made no such loan. The company claims to be Financial Crimes Investigation Department.
Consumers who are inquiring online for a pay-day loan are giving much personal information out that is either being stolen by means of cyber crime, or the original lender is selling the consumer's data to others.
Although many consumers have signed up for pay-day loans and then ultimately decided against using them, they are still getting these collection type calls. The calls are threatening in nature and warn the victim of arrests, wage garnishment and in some cases, bodily harm.
Freeholder Director Robert Damminger said, "Even if someone has only inquired about a pay-day loan and has not used it, these scare tactics can frighten some people into paying. No debt collector has the legal authority to have anyone arrested for anything. These are criminals calling you to steal your money by gaining access to your bank account and credit card numbers. Unlike other scammers, these are playing on your fear rather than your greed or sympathy."
"If you receive a call like this, please contact your local police department or the Gloucester County Office of Consumer Affairs or both," Director Damminger said.
The Gloucester county Consumer Affairs office has been busy working on tracking down many of these numbers and even calling phone banks and there has been little or no cooperation.
"The level of aggressiveness by these con artists is very disturbing" said Freeholder Deputy Freeholder Director Warren S. Wallace Ed. D., Liaison to Consumer Affairs.
"Considering the widespread use of these types of scams consumers need to protect themselves. Ask the caller to identify themselves and give you a phone number where you can call them back. You can then call our Consumer Affairs office and they will place a call to the company to check to see if they are legitimate," said Freeholder Deputy Director Wallace.
Here's how a payday loan works: A borrower writes a personal check payable to the lender for the amount the person wants to borrow, plus the fee they must pay for borrowing. The company gives the borrower the amount the check less the fee, and agrees to hold the check until the loan is due, usually the borrower's next payday. Or, with the borrower's permission, the company deposits the amount borrowed - less the fee - into the borrower's checking account electronically. The loan amount is due to be debited the next payday. The fees on these loans can be a percentage of the face value of the check - or they can be based on increments of money borrowed: say, a fee for every $50 or $100 borrowed. The borrower is charged new fees each time the same loan is extended or "rolled over".
If you have any questions on pay-day loans or any other consumer related issues, please contact the Gloucester County Office of Consumer Affairs and Weights and Measures at 856-384-6855.