Saturday, October 1 2022

FRESNO — As consumers lost jobs and struggled to make ends meet during the COVID-19 pandemic, many turned to payday loans and other short-term solutions, with online solutions proliferating. This not only allowed predatory lenders to thrive — many borrowers still struggle with sky-high interest rates and opaque fees — but also created a fertile environment for scammers, according to a new study investigative study through Better Business Bureau (BBB).

Payday loan laws operate state-by-state in the 32 states where they are available, and an intricate web of regulations makes it difficult to understand the industry’s impact in the US and Canada.

However, the BBB study finds a common thread in the triple-digit interest rates many of these loans carry — cloaked by interest compounded weekly or monthly rather than annually, along with significant rollover fees.

Image of a man holding open a wallet with nothing in it.

Image by Towfiqu Barbhuiya.

From 2019 to July 2022, BBB received more than nearly 3,000 customer complaints about payday loan companies with a disputed dollar amount of nearly $3 million. In addition, BBB has received more than 117,000 complaints against collection agencies.

Complainants often indicated that they felt misinformed about the terms of their loans. Many fall into what consumer advocates call a “debt trap,” piling on interest and fees that can leave customers paying double the amount originally borrowed. A woman in St. Louis, Missouri, recently told BBB that she paid over $1,200 over the course of her $300 loan and still owes another $1,500.

Image of a computer hacker.

Picture by B_A.

Scammers didn’t miss an opportunity to take advantage of consumers either, as BBB Scam Tracker received more than 7,000 credit and collection fraud reports, resulting in a loss of approximately $4.1 million.

Impersonating payday loan companies and debt collectors, scammers arm themselves with stolen information to convince consumers to give up bank account information and cash. In one case, BBB found that hackers had stolen and released detailed personal and financial information from more than 200,000 consumers. news reports indicate that it is not single case.

A Fon Du Lac, Wisconsin, a woman reported recently receiving a call from an alleged debt collector stating that a court case was pending against her over an overdue payday loan debt. Fearing legal trouble, she ended up sending the scammer $500 and her credit card information. Over the course of several months, her card was charged again until she canceled it.

Image of a jar full of coins being knocked over.

Image by Josh Appel.

Federal regulators have enacted stricter laws to curb predatory lending, but those regulations have been reversed in recent years, allowing states to create their own rules for interest rate caps and other aspects of payday loans.

More than a dozen states passed laws regulating payday loans in the past year, but the landscape for legally operating payday loans remains patchy from state to state.

Image of the Pew Charitable Trusts logo. Currently, 18 states do not allow payday loans. according to PEW Charitable Trust. additionally military loan law sets an interest rate of 36% on certain payday loans. When it comes to fraudulent behavior, law enforcement agencies are limited in their ability to prosecute payday loan scams. Some legit payday lenders have attempted to prevent fraud by educating consumers on how to contact borrowers and how not to contact them.

The BBB study advises consumers to carefully research all of their borrowing options — as well as the terms of a payday loan — before signing anything to take out a short-term loan.

Image of a hand holding up burning money.

Picture by Jp Valery.

The study also includes recommendations for regulators:

· Limit consumer credit to 36%.

· Make more people aware of no-fee extended repayment plans.

· Commit lenders to check whether consumers can repay loans.

· Require cell, Venmoand other payment services to offer refunds in cases of fraud.

Where to report a payday loan scam or make a complaint:


Federal Trade Commission (FTC) –

Canadian Fraud Control Center (CAFC) – On-line or by phone at 888-495-8501

· Attorneys General can often help. Check your attorney general’s website for information on whether you can apply on-line.

· Image of the Consumer Financial Protection Bureau logo. If you have an overdue payment on a payday loan that Consumer Financial Protection Agency might have resources to help you set up a payment plan.

For more information on this study and other studies on BBB fraud, visit

BBB Infographic on US Payday Loan Fraud and Pirate Lending (PDF)

About Better Business Bureau

BBB is a not-for-profit, business-supported organization that sets and upholds high standards of fair and honest business conduct. BBB consumer services are free. BBB advises objectively, BBB business profiles to more than 5.3 million companies, 11,000 charity reviews, Dispute Resolution Services, warnings and educational information on issues affecting market confidence.

Visit for more informations. There are local, independent BBBs in the United States, Canada and Mexico, including BBB Serving Central California & Inland Empire Counties, which was established in 1950 and serves 11 counties in the state of California.

Check out this short BBB public announcement video!


This Pico-W IoT starter project gives you quick access to the home assistant


Dixon Technologies and Google Sign Pact to Sub-License Android and Google TV Rights; stock climbs ~2%

Check Also