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Consumer Alert: Payday Loans and Collection Calls

PHOENIX (Friday, May 13, 2011) -- Arizona Attorney General Tom Horne warns consumers to be aware of collection call scams relating to outstanding payday loans. Many Arizona consumers have received collection calls from fake law firms or fake government agencies telling consumers they owe monies to a payday loan company and threaten consumers with legal action. They also ask the consumer to provide bank account information to pay off the outstanding debt.

Arizona consumers have reported that many of these calls originate from outside the United States or state of Arizona. Oftentimes the collection call sounds legitimate because the company has personal identifying information including the consumer’s bank account information, full or partial social security number and/or driver’s license number. The company may also have information about the consumer’s employer and personal friends and relatives.

The Arizona Attorney General’s Office urges consumers to remember that payday loans are illegal in Arizona as of June 30, 2010. If a payday loan was taken out prior to that date and a balance is still due, the consumer is still obligated to pay back the debt. Also, internet payday lenders are generally subject to the same laws governing consumer loan lenders in Arizona. Consumers should be cautious of signing up for an online payday loan. Many Arizona consumers, who have attempted to apply for an online payday loan, have become victims of harassing calls simply because they entered their personal information into an unsecured website. Even if you do not accept the online loan, your information still may be vulnerable to third party companies. Remember: If you never took out a payday loan then you do not owe debt towards a payday loan.

Here are some tips to remember if you receive a telephone call from a collector claiming you owe debt to a payday lender:

Do not give out personal identifying information over the telephone, including bank account information or credit card information.

  1. If you had a payday loan and paid it in full, clarify with the original lender that your debt has been paid in full before making additional payments.
  2. The Fair Debt Collection Practices Act prohibits collectors from using unfair, abusive or deceptive practices to collect debt, including:
    1. threatening to arrest you if you do not pay your debt;
    2. threatening to garnish your wages; 
    3. calling repeatedly and harassing you;
    4. falsely claiming to be law enforcement, an attorney or law firm; or
    5. falsely claiming you committed a crime.
  3. The Federal Trade Commission handles scam telephone calls and offers an FAQ for consumers:http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm
  4. To stop a collector from harassing you, make sure you take the following precautions:
    1. Ask the collector to send you a statement in writing of the debt that is owed;
    2. If a debt is not owed and you would like the collector to stop contacting you, send a letter to the company via certified mail;
    3. Make sure your number is listed on the Do Not Call registry to prohibit harassing, unwanted and unnecessary telephone calls: http://donotcall.gov

If you feel you’ve been a victim of consumer fraud, please contact the Arizona Attorney General’s Office Consumer Information & Complaints Unit at (602) 542-5763 / (520) 628-6504 / (800) 352-8431.