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While there are 23,000 regulated payday lenders in the US, there are also thousands of scammers purporting to be among them. With phishing and other scams on the rise, it’s important to know how to avoid scams, and how to react if you think you’ve fallen victim to one.


Key Points:


  • Loan scammers target those most vulnerable, namely the eldest and youngest groups of borrowers. 
  • To protect yourself, you should only work with regulated lenders, 23,000 of which operate in the US. 
  • You can verify that your lender is regulated by searching for your lender on the OLA website or SEC register. To see how reliable they are, check their status with the Better Business Bureau
  • Licensed lenders follow state and federal laws. 
  • Common scams include advance fee loan scams and phishing scams. 


phishing scam

Phishing scams are a common means of trying to steal your information.


How Do I Know If I’m Being Scammed?


One enormous red flag can be spotted if you are offered a payday loan in a state which prohibits them. 13 US states ban payday loans. These states are Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, West Virginia, and the District of Columbia. 

If payday loans are banned in your state yet you have been offered a payday loan, you should not agree to it. This will be a scam. 

Additionally, if a loan in excess of your state’s loan limit is offered to you, then you should question the lender. For example, if you live in California, where loans are capped at $300, but you are being offered an $1,000 loan, this is not legitimate and could lead to serious consequences. 


What Are Scam Debt Collectors?


Scam debt collectors have also been known to try and get their hands on money in bad faith. If you are approached by a debt collector and their demand doesn’t match up to your loan, they could be trying an elaborate scam. Similarly, if you haven’t taken out a loan, then debt collectors shouldn’t be trying to secure any money from you. 

If you did take out a payday loan, make sure that the collector is reputable and from the correct lender that you borrowed with. 


Recognising Scammers


Part of being able to recognise when you are being targeted by a scam is knowing what scams and tactics to be suspicious of. 

In most loan scam cases, the scammer contacts a borrower claiming to be a debt collector. The conman then demands a repayment, or says a previous payment didn’t go through. They will likely threaten legal action if a payment is not made. They will ask you to provide a bank account or credit card number to pay off the debt.

Remember, if you have genuinely taken out a loan, you will have already established a clear line of communication with them and they will contact you by these means. If it seems fishy, it probably is. 

This is typically a scam and you should report this behavior to your bank. 




You can usually understand how valid a lender is based on their website. There are exceptions to this rule, but much can be garnered from a lender’s web presence. 

Most importantly, Check The Site Is https: In ‘https’ the ‘s’ stands for secure. If their web page’s address omits the ‘s’ and just says ‘http’, stay away. The website could be a scam and trying to phish for your details. Given that you will provide personal information, you want to protect yourself as best you can. 



What Scams Should I Look Out For?


Advance Fee Loan Scams

Here, scammers will offer you a loan but demand an immediate payment, claiming it is for “insurance” or to “demonstrate good faith.” In many cases, they will ask for your card details over the phone. A genuine lender will not do this. 


Phishing Scams

In these scams, someone tries to get you to reveal sensitive information in order to provide you a loan. The loan never materializes but you or your business becomes a victim of identity theft.


What Scams Should I Look Out For?

Many states, such as D.C. have capped APR on payday loans. If a lender offers a loan outside of these laws, they are likely trying to swindle you.


I Think I’ve Been Scammed! What Now?


Your first step should be to call your bank and freeze/cancel your cards as soon as you can. This means scammers will not be able to remove money from your accounts. 

Get in touch with the police and inform them of the scammer and any details you have regarding them and the scam. They may be able to help you, and deal with the criminals. This protects others! 

You may want to apply for a new ID,  such as a passport or driving license, or anything that was given to the scammers. You can often report these items as stolen, to protect you in the future.