25 Sep Online Payday Lenders: The Next Wave of Indentity Theft?
In the last few years, payday lenders have grown on the Internet. Are you setting yourself up for identity theft problems?
It’s a common-enough scenario these days: You are looking for a quick, small loan and the Internet seems to make it really easy. Just log-in to a friendly website, plug in your personal information and bank account data and a quick loan appears in your account. Easy as can be.
For a lot of people, this happens every day and nothing unexpected happens. Other than the predictable cold jolt upon discovering that incredible interest rate they’re charging for short-term small “payday” loans, of course.
On the other hand, how crazy does it sound to log into a website — where in most cases you can’t find a physical address, only phone numbers and e-mail forms for the company — and hand over all your financial and personal information? As early as 2000, the Massachusetts Division of Banks was warning about this risk.
And some very odd things sometimes are happening. For example, the St. Louis Better Business Bureau reports that some services collect this sort of information and then give you a loan — a deposit is made to your account — without authorization. And if you refuse to pay, or pay the exorbitant interest, they are threatening to turn the accounts over to collection.
The irony is that the risk of identity theft is probably relatively low mostly because most of the folks exploring the Net for payday loans may be perceived as lower income or those with poor credit. So, as victims go, folks with lousy credit may be less desirable. But with the economic downturn continuing to claim jobs and banks being tighter with lending, more credit-worthy folks are dipping into the payday loan shark tank every day.
The bottom line is that high-interest, short-term loans are usually a bad way to put off the inevitable financial problems you face. Taking out any loan from someone you can’t physically locate in case something goes wrong is dramatically compounding the risks you are taking. And then doing it through the faceless Internet…well, didn’t your mother always say not to trust strangers?
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