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Payday Loan Scams: How They Work + How to Protect Against Them

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Looks Legit! What Could Go Wrong? A Lot, Actually

Scammers have a lot of time on their hands to develop and try out new scams, so they are never short on new twists to stay sophisticated in their approach. One such variation that comes up from time-to-time targets users of payday loans. This scam can have ramifications for all consumers, whether they’ve used such entities in the past or not.

In the most recent variation, scammers claim to represent a legitimate (or at least a legitimate-sounding) entity, such as Advance America, Advance America Inc., Cash America, Cash Advance America, Speedy Cash, or Advance America Payday Loans. Scammers present consumers with offers of loans on the company’s behalf, despite having no association with them.

They can be very convincing, especially when they use threats or intimidation while appearing to have access to your personal information. Armed with the reputation of a legitimate business, threatening language, and the relative anonymity that exists when using the internet, email, and telephone, they often get what they want from their targets.

Here’s some information to help avoid letting it happen to you.


The scammer will reach out to you by email or phone call to present a loan offer or to demand repayment on a past debt (one that is most likely nonexistent). Recently, scammers have presented loan offers to supposedly help consumers catch up on their past debts, and they have even packaged these offers as a special form of assistance in return for the consumer doing so well repaying other payday loans.

They will request you transfer money as a “processing fee,” a “good faith deposit,” or as a means of “verifying your identity/trustworthiness” to them. To achieve this, they ask you to wire money or purchase a prepaid debit or gift card from a retail store. You are then asked to provide the card information as proof of trustworthiness. For instance, they may ask you to buy an iTunes card for $200-$400 and then give them the card info. Once you share that information with them, it’s theirs. It’s virtually impossible to trace back to the scammers, and of course, there is no loan.

In other instances, scammers may try convincing you to provide your online sign-on ID and password so they can gain access to a mobile application. They use mobile check depositing to deposit fake checks into your account and instruct you to withdraw the funds. Then they ask you to send it back to them through an alternative system, such as Western Union or prepaid cards as detailed above. They promise that once you’ve completed the task, you will get the full amount of the loan. Example: They instruct you to send them the $480 they just deposited so you can get the full $2,500 loan proceeds. They now have the card information and the funds that exist on it, the check they deposited to your account will almost always be returned, and you never get the loan.


  • Never give anyone your personal information (e.g. social security numbers, credit card, or account information) to any individual, website, or company without verifying their legitimacy—especially if you did not initiate the contact.
  • Be aware that entities often tip their hand that they are attempting fraud. For instance, they will often use non-business email addresses (such as,, or similar free, easily-obtained email addresses) to contact you. Their emails may threaten legal or criminal action if you do not reply. They may contain broken English, typographical, and/or spelling errors.
  • Never wire money or provide prepaid debit card info as a “show of good faith.”
  • Keep a record of all your outstanding debt along with lender contact information so you can recognize when someone is trying to force you into repayment of a non-existent debt.
  • Regularly review your statements and registers for unrecognized transactions. Check your credit report regularly— is the only official federally authorized site to get your free annual credit reports.
  • If approached from someone claiming you owe them a debt, demand proof of it (as the law requires). This is especially true if you do not recognize the debt.
  • Be suspicious of any email or phone call where there is an urgent request, deadline, or need for personal info.
  • Be aware that legitimate debt collectors cannot threaten you with arrest or legal action in addition to demanding personal financial information. Collection activities are subject to the federal Fair Debt Collection Practices Act.

One of the best ways to avoid becoming a victim of activities like these is to bank with a trusted partner like 3Rivers. Unlike scammers, who offer false hope to consumers, we help our members with understand money matters every day. We form relationships so we know our members and their financial needs. Together, we help them find and develop genuine hope and confidence in knowing they’re educated, aware, and safe while banking with a partner that looks out for them. 

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