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Avoid Online Payday Loan Scams | WREG.com

MEMPHIS, Tenn. — It’s hard to miss all the signs for the payday loan stores on what seems to be nearly every corner in some Memphis neighborhoods.

Banned in Arkansas, but still available in Tennessee, consumer advocates have long warned against the high-interest loans.

WREG spoke with a customer, who didn’t reveal his identity on camera, who was highly aware of the risks.

“So you’re talking about you’re repaying a loan that you know is high interest, but it’s hard to get out of it once you get in it,” the customer admitted.

That cycle of debt is one thing, but experts say there is a greater risk that consumers need to know about.

Better Business Bureau President Randy Hutchinson talked about the dangers of online payday loans with the On Your Side Investigators.

Instead of walking into a  brick and mortar store to get a loan, consumers now have more and more options to get payday loans online.  Some of the traditional stores have simply added the option to their websites while others are online only.

Experts say while online payday loans may seem more discreet and convenient; there are some serious risks to consider.

“You add the security risk, the risk of identity theft that you’re providing information to somebody that’s online,” explained Hutchinson.

Hutchinson says part of the problem is that customers have no idea who they’re exchanging information with, or if the company is even legitimate!

He also says the company may not even be licensed to do business in your particular state.

The Federal Trade Commission recently helped shut down a Florida based company that was supposed to be offering payday loans to customers, but instead, just stole their money.

In another case, Hutchinson says some of the people never even applied for a loan.

“One of the companies just bought information from somebody else and starting setting up phony loans,” Hutchinson explained.

Whether you’re applying for a payday loan at a store or online, understand the fees and risks, check the company out and pay close attention to your bank account.

The gentleman WREG spoke with says the combination of a tight budget and a family emergency led him to the payday loan store, but he has some advice for others.

“If you can stay away, do so.”

Contrary to popular belief, lots of payday loan customers are working and middle-class families.

Experts say cheaper loan options include getting one from the bank, credit union or even a finance company.

There’s also a cash advance from a credit card, or simply borrowing from a relative.

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Avoid Online Payday Loan Scams | WREG.com

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