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Avoid falling for an unlicensed payday lender

Protect your information and avoid problems
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Posted at 1:50 PM, May 19, 2020
and last updated 2020-05-19 15:51:46-04

We know many people are feeling financial stress right now. Check out these tips to avoid the headaches of falling for the pitch of an unlicensed payday lender.

Avoid falling for an unlicensed payday lender by following these tips:

  • Don’t share your personal information without doing research on the company.
  • Even if you fill out the online form but do not hit submit, your information may have already been captured by using keystroke logging.
  • Some companies are actually lead-generators and not lenders, meaning your personal information may be sold to several third-parties lenders.
  • Check the website for a privacy policy. Does it disclose how your information will be shared or protected?

Consider other options before taking out a payday loan:

Does your bank or credit union offer short term loans?

Check these local institutions to see if a better option is available. Rates for personal loans are between 9 and 17% right now.

Have you thought of asking your employer for an advance?

Can you borrow against life insurance? Talk with your agent to find out if this is reasonable under your circumstances.

Can you borrow against your IRA or 401k? Some organizations have waived or reduced penalties for these options, amid current economic conditions. Check with the carrier of your investment accounts.

Read more about your options -- Can a personal loan help during a crisis? 5 questions to ask
Tips on handling your credit cards amid virus outbreak

Along with overall concerns about the pitfalls of taking out a payday loan, people in desperate circumstances may not realize their dealing with an unlicensed lender online. These could be scammers looking for nothing but your personal information, or unscrupulous lenders making illegal loans.

Information below is from Stop Fraud Colorado

Avoid falling for an unlicensed payday lender by following these tips:

  • Don’t share your personal information without doing research on the company.
  • Even if you fill out the online form but do not hit submit, your information may have already been captured by using keystroke logging.
  • Some companies are actually lead-generators and not lenders, meaning your personal information may be sold to several third-parties lenders.
  • Check the website for a privacy policy. Does it disclose how your information will be shared or protected?

Protect your banking information:

  • Setting up automatic payments with an online payday lender may seem convenient, but you could be allowing an unlicensed company access to your bank account, making multiple unauthorized withdrawals.
  • Find out if the online payday lender has a physical location.
  • Lenders that do not disclose a physical location are often unlicensed and could even be operating outside of the country.
  • If the website does not have a “Contact Us” page, try searching the website’s privacy policy or terms & conditions, often found at the bottom of the homepage.

Read and understand the loan agreement:

  • Does the loan specify that Colorado law applies? A company must be licensed by the State of Colorado in order make loans to Colorado consumers.

Verify the payday lender is licensed to make payday loans in Colorado:

  • Searching the Licensed Supervised Lenders List, available here.
  • In order to become a licensed payday lender in Colorado, the lender must provide specific information to determine if the company complies Colorado’s lending laws.
  • Licensed payday lenders must follow Colorado payday lending laws, which set allowable loan rates and fee limitations.

Anyone who feels they've been taken advantage of by a payday lender should contact the Colorado Attorney General's office right away to file a complaint: https://coag.gov/file-complaint/

For more consumer protection resources, advice, and reviews of payday lenders visit https://www.bbb.org/local-bbb/bbb-of-southern-colorado