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Home > Blogs > Here's the Deal > Archives > 2010 > March > 05 > Entry
BBB issues warning about online payday lenders
This week, the local Better Business Bureau is warning cash-strapped families to beware of some online payday lenders claiming they’re not obligated to follow state or federal laws regarding licensing requirements, debt collection practices or caps on interest rates.
“Desperate times are leading people to the Internet to apply for payday loans and many are falling deeper into debt after getting tangled up with lenders who have zero regard for the law,” said John North, BBB president and CEO.
“Unlike payday loans you might get from local businesses, online payday loans require bank account numbers and, as a result, borrowers are at lenders’ mercy when more money than expected is withdrawn from accounts.”
Hundreds of people have complained to your BBB after signing up for payday loans on sites like OnceClickCash.com, 500Fastcash.com, rbtloans.com and Ameriloan.com.
Complainants state they agreed to what they believed were one-time payday loans — typically a few hundred dollars to be paid off in two weeks. They supplied their bank account information to lenders and the money was promptly deposited.
Complainants state all of their subsequent payments went toward paying off recurring finance charges and never toward principals. As a result, they report paying two and three times the original loan amounts and still having the same amount of principals to pay off.
When looking for a payday loan online, the BBB recommends the following:
— Consider all of your options. Payday loans can be extremely expensive if you’re unable to pay the loan off quickly.
The Federal Trade Commission recommends looking into a short term bank loan, contacting your current creditors quickly to explore payment options, working with a credit counseling center or, at the very least, shopping around for the best interest rate and terms.
— Look for the red flags. Unscrupulous online lenders often wave the same red flags including not being forthcoming about their location or contact information. Also, be cautious of lenders that don’t ask you for background information outside of your bank account number.
— Research lenders with your BBB. Always check online payday lenders’ reliability reports before handing over bank account information. BBB Reliability Reports are available for free online.
For more info, visit www.bbb.org or call (937) 222-5825 or (800) 776-5301.
Permalink | Comments (7) | Post your comment | Categories: Scams to watch out for
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By Joe
March 6, 2010 11:22 AM | Link to this
There are two points I would like to bring up in regards to this article. First, if you don't know by now that payday lenders are not a good way of handling your financial situation you probably never will. They are in business because, in spite of the perils of patronizing these companies, people still find them useful. They are not unlike "buy here pay here" car lots, "rent to own" furniture stores, or pawn shops. They fill a void left by banks that, rightfully, don't care to make risky loans. Those who use this tier of financiers, as a whole, are less likely to pay back these loans; therefore they must pay higher rates for this offer of credit. It comes down to personal choices, if you find the rates too high, don't take the money! If your friend or family member is considering this avenue and you don't like it, offer them your money! My second peeve, agitated when reading this, was about the Better Business Bureau. In my personal experience I found the BBB to be extortionists in their own right. They are glad to post any negative aired about a company and to make a mark against them unless you agree to pay to be a member. If you are a paying member they are far less likely to sully your business name, and will give you opportunity to mitigate the claim. Their basic tenet: if you pay the BBB you are far less likely to be disparaged by a claim of wrongdoing, whether valid or not. If the BBB is supposed to be a consumer protection company they should be run similar to "Consumer Reports" and not accept money from the businesses on whom they report. In fairness, the recommendations made by the BBB, aside from using their tainted records, are certainly good advice.
By mike
March 6, 2010 4:18 PM | Link to this
i agree with you, joe - borrower beware. though i will say this - jill kelley is really cute ;)
By Kathy
March 6, 2010 8:35 PM | Link to this
Wow! I am glad to see the comments on the BBB. I always thought it was just me who viewed the BBB this way! They have companies that are paying members as you stated that are dreadful, and provide substandard products and services, and they do nothing! Glad to see people are waking up to the BBB scam!
By mdizzie
March 6, 2010 9:40 PM | Link to this
Check cashing places are bad enough. I understand not everyone needs or wants a checking account. A lot of people I know will pay a 3 dollar check cashing fee for a pay check and have all their money is cash, not in credit like at a bank. But why give up your bank account info to an online business you have never heard of and that isn’t insured by the FDIC? As a former bank teller, I had to help people with their bank accounts after they had basically given it away on their own accord. NEVER give your bank account information to anyone for any reason unless you are sure its a real business. AOL and DUKE are notorious for debiting accounts without the knowledge of their customers, so be aware of these risks.
By BBBis a scam
March 7, 2010 8:11 AM | Link to this
When I had a business the BBB would try and shake me down all the time for annual fees and all sort of fees. For what? Place is a joke. Every mortgage company or title company that went down for fraud was always an UPSTANDING member of the BBB…many times the BBB would still have a positive ‘status’ on the business even AFTER they were found to be guilty of fraud or other stuff that would adversely affect the consumer. BBB is a joke bottom line. They take money (bribes) from your business in exchange for good ‘status’ in the community. I should start my own BBB and charge every small business $300 per year to join.
By trapper
March 8, 2010 6:42 AM | Link to this
BBB probably started as a well intentioned means of protecting and educating the public, but I agree it has gone downhill. I have twice been a member and for my $400 annual fee, I got a vehicle sticker and a wall plaque and never heard from them again until they wanted the next $400. Their sales pitch was about all the people that had inquired about my business over the past year, but when I asked why I wasn’t notified, they didn’t have an answer. Part of the reason a business joins BBB is advertised their reputability and increase their business. A little hard to do that if BBB doesn’t tell you people are interested, in a positive way, about your business. BBB, get back to your roots.
By JanetFANNING
November 3, 2010 11:31 PM | Link to this
Wow, I am happy to find this well Sharon JOSE