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Dangers of applying for an online payday loan

As consumers move their financial activities online, applying online for a payday loan may seem like the natural thing for a cash-strapped person to do.

But you could be setting yourself up for a world of hurt, from paying exorbitant interest rates to having funds swiped from your bank account to being threatened by debt collectors. Just filling out an application could be enough to begin the harassment and thievery.

“Absolutely the worst thing you can do is apply for an online payday loan,” says Jay Speer, executive director of the Virginia Poverty Law Center.

Most online payday loan sites aren’t even operated by lenders. They’re run by “lead generators,” who seek your personal information, such as Social Security number, driver’s license number and bank account details. They then sell that information to lenders.

“Your email and telephone explode after that,” Speer says, as lenders vie to offer you cash. That can happen even if you live in one of the 15 states where payday loans are illegal.

Lenders aren’t the only ones in the market for your personal information. “There’s a good chance they sell to fraudsters — people who come after you months or years later,” he says.

Sandra Green (not her real name) has experienced this firsthand. The Virginia woman turned to online payday loans after her husband was injured and couldn’t work for two years. Their credit was damaged and they couldn’t get cash to pay their bills from traditional financial institutions.

Green took out several loans totaling $3,000 to $4,000 starting around 2010. The lenders that she received cash from took their payments from her bank account — but they weren’t the only ones. A company she had never heard of swiped money from her account, creating an overdraft.

She filled out a request for the bank to stop payment. That worked for about six months, and then the withdrawals started again. “People will change the identity of the company and then they’ll hit it (the account) again. Once they do this it’s a never-ending cycle,” she says.

Companies she’d never done business with would call her at work and at home, harassing her. One threatened to file papers with the local sheriff’s office if she didn’t pay immediately.

“They get really belligerent when you don’t do what they want you to do,” Green recalls.

She feared she’d wind up in bankruptcy because of the loans and finally sought help from Blue Ridge Legal Services, a Virginia legal aid society, in 2013. Blue Ridge connected her with the Virginia Poverty Law Center.

Speer says of online payday lenders: “These people are like sharks. If you give them some money it’s like throwing blood in the water.”

Payday loans are generally described as small, short-term loans. A consumer writes a check for the amount borrowed, plus a fee. The lender advances money against the check and the check is held until the next payday, when the loan and fees must be paid. Or, in the practice used by most online lenders, a consumer can grant the lender access to his bank account, and the lender electronically accesses the account to deposit money and withdraw payment.

Even paying back legitimate loans carries astronomical costs. Green took out a loan of $350. It took six weeks for her to pay it back, and she paid nearly $300 in fees.

Online payday loans boom
Her experiences are not uncommon. “Fraud and Abuse Online: Harmful Practices in Internet Payday Lending,” a 2014 study by the Pew Charitable Trusts, found online installment payday loans typically have an APR of 300 percent to more than 700 percent. Online lump-sum payday loans have a typical APR of 650 percent, or $25 per $100 borrowed per pay period. Exorbitant fees are also charged, and initial payments might not be applied to the loan’s principal.

Online payday lending is big business. Revenue tripled from $1.4 billion in 2006 to $4.1 billion, according to Pew.

Of the more than 250 online payday borrowers surveyed by Pew, almost 40 percent said their personal information was sold to a third party without their knowledge. Nearly one-third had an unauthorized withdrawal from their account.

Threats were common, with 30 percent of those surveyed saying they were threatened by an online lender or debt collector.

“Harassment and fraud are really concentrated in the online lending market,” says Nick Bourke, project director for Pew’s study on payday loans.

Part of the problem stems from the fact that there’s no control over who can get your information once you apply for an online payday loan. “People’s personal information can be spread far and wide,” Bourke says.

Even if the loans are fraudulent, a consumer’s failure to pay them may be reported to one of the three main credit bureaus, Speer says, which can impact a consumer’s ability to rent an apartment or land a job.

Many storefront payday lenders are fed up with the behavior of these online payday lenders.

“These unlawful lenders roam the Internet trolling for customers. They are scammers. They are fraudsters,” says Amy Cantu, spokeswoman for the Community Financial Services Association of America, which represents more than half of the country’s storefront payday lenders.

Though online payday lenders represent just one-third of the marketplace, 90 percent of payday lending complaints filed with the Better Business Bureau are aimed at them, according to Pew.

Self-regulation efforts
Association members vow to adhere to the organization’s best practices, which include complying with state and federal laws, being licensed in each state in which they do business and adhering to acceptable debt collection practices.

Some of the association’s larger members also have an online presence, she says, but those sites also adhere to the organization’s best practices.

Cantu says she understands that consumers with financial troubles may prefer the anonymity of the Internet when seeking cash, rather than walking into a storefront payday lender. But online lenders are supposed to only operate in the states that allow payday lending.

Her organization wants the federal consumer watchdog agency, the Consumer Financial Protection Bureau, to crack down on illegal lenders.

Agencies crack down
Already the CFPB and the Federal Trade Commission are stepping up action against fraudsters. In a joint news conference in September, the agencies announced they’d filed suit against two online payday lenders.

The CFPB sued Kansas City-based Hydra Group, while the FTC sued CWB Services, also based in Kansas City.

The CFPB received more than 1,300 consumer complaints about the Hydra Group.

At the news conference, CFBP Director Richard Cordray accused the Hydra Group of “running an illegal cash-grab scam to force purported loans on people without their prior consent. It is an incredibly brazen and deceptive scheme.”

Both the Hydra Group and CWB Services were accused of buying personal information, including bank account numbers, from lead generators. The companies would deposit money into consumers’ bank accounts without any signed agreements, and then make unauthorized withdrawals from the accounts. If a consumer complained, the companies would produce false loan documents.

In 15 months, the Hydra Group made $97.3 million in loans and collected $115.4 million from consumers.

Even if consumers closed their accounts, their information might have been sold to debt collectors, who then attempted to collect more money.

A federal judge temporarily shut down the Hydra Group, freezing its assets. The CFPB is requesting a permanent shutdown, along with penalties imposed upon the company and refunds made to consumers.

With CWB Services, the federal court froze the company’s assets and appointed a receivership and the FTC is requesting consumers’ money be refunded. The company had raked in $46 million in 11 months, said Jessica Rich, the FTC’s director of the Bureau of Consumer Protection.

Bourke says the CFPB should ensure that small loans are tailored to the borrower’s ability to pay them off and should provide more protection to consumers, particularly against illegal debt collection practices.

“The core of the problem is that payday loans don’t help people. They drive people further into debt and distress,” he says.

See related:Know your credit card fraudster


Know your rights under the Truth in Lending Act


New protections from financial ‘gotchas’ in 2015Dangers of applying for an online payday loanCFPB orders refunds for 98,000 subprime cardholdersFighting back against the growing threat of tax fraudFinanceLoanspayday loanbank account […]

Rangers need more cash to pay for day-to-day expenses

RANGERS last night revealed they will require “significant further funds” to meet their day-to-day costs by the beginning of next year.

The club posted an £8.3million loss in their latest financial accounts, published last night. Figures for Rangers International Football Club plc to June 30 this year show losses have almost halved from around £14million last year but again laid bare the precarious cash picture at Ibrox.

The accounts showed that former chief executive Graham Wallace, who received a £100,000 pay-off when he left the club following the completion of Ashley’s loan deal, picked up nearly £380,000 between November last year and June 2014.

Former finance director Brian Stockbridge, who became a hate figure for fans due to his relationship with Charles Green, pocketed nearly £220,000, while Craig Mather got a bumper £350,000 golden handshake when he resigned as chief executive in October last year.

While there was £4.6m cash in the bank on June 30, just over £3m of this is related to Rangers Retail Limited and “not immediately available as working capital”.

There were also increases in money received from sponsorship and advertising and broadcasting rights but there was a £323,000 reduction in commercial revenue.

It leaves Rangers facing another cash shortage unless they can source more outside investment, with the board set for a stormy shareholder summit when fans and investors gather at Ibrox for the AGM next month.

Auditors Deloitte warn that the firm “requires additional funding to continue to meet its liabilities as they fall due”.

But Rangers say they have “several options open to them to raise the required funds and have been approached by several parties wanting to offer funds on a secured basis”.

Most of the cash, which is likely to come from a fresh share issue if the motion is agreed by shareholders at the AGM on December 22, will be required in the early months of next year as the board continues to face significant funding issues while Ally McCoist’s side bid for promotion back to the Premiership this season.

The Ibrox hierarchy have come under huge pressure from supporters in recent months and will again face tough questions after posting accounts that also show that:

l Revenue is up from £19.1million to £25.2m;

l Staff costs were down from £17.9m to £14.7m;

l Revenue from season tickets dropped from £8.1m to £7.7m;

l Cash at June 30 was £4.6m;

l Retail revenue rose from £1.6m to £7.6m;

Rangers have faced a number of cash challenges in the last 12 months and, after repaying loans to Sandy Easdale, chairman of the club’s football board, and fan George Letham worth a total of £1.5m, the Ibrox side had to take out two loans totalling £3m from Newcastle United owner Mike Ashley while an open share offer raised £3.13m.

In his report to shareholders, RIFC plc chairman David Somers again outlined the reasons behind the board accepting a deal from Ashley in favour of a £16m bail-out from Dave King’s consortium and an offer from businessman Brian Kennedy, a call which infuriated supporters.

Somers admitted there would be more “testing times ahead” for Rangers but said he was “confident we’ll continue to successfully clear every hurdle put in front of us”.

The club last week confirmed that 10 members of behind the scenes staff at Ibrox had been made redundant and overall staffing levels and costs have been reduced in the last 12 months.

A total of £1.9m has been saved on wages, with manager McCoist’s decision to half his annual salary and a reduction in the cash paid out to players playing a significant part.

The ratio of first team wages to turnover has been reduced from 43% to 26% but season ticket sales and average attendances fell by around 2000 and 4000 respectively.

Somers said: “Some fans decided not to renew their season tickets but stated that they will continue to support the team by attending on a match-by-match basis. We respect everybody’s decision to make the choice they feel is right for them although, at the time of writing, the number of fans attending our home league games so far this season is down year-on-year.

“This has had a large negative effect on our balance sheet and reduces our ability to move forward with the desired momentum and the club has been compelled to seek additional funding.”

Related Articles:

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ACE Cash Express Joins the Green Dot Reload Network, Adding 1,500 Locations


ACE Cash Express, Inc. (ACE) and Green Dot Corporation (GDOT) have signed a distribution agreement, making ACE an authorized retailer for the Green Dot Reload Network. Beginning this month, any cardholder with a Green Dot Network-enabled prepaid card can now reload cash to their card at any of ACE’s 1,500 locations in 35 states and the District of Columbia. Additionally, in 2015, Green Dot will begin selling other Green Dot-branded products at ACE locations.

Green Dot owns and operates the nation’s largest reload network. More than 200 programs representing millions of cardholders utilize Green Dot’s network for reload services through approximately 100,000 retail locations nationwide. Green Dot’s recent expansion into leading financial services center (FSC) retailers throughout the U.S. has met with strong retailer and consumer demand. In just the past twelve months, Green Dot has gone from no distribution in this important customer channel to now, with the addition of ACE, nearly 3,000 FSC locations coast to coast selling its products and services.

About ACE Cash Express

ACE Cash Express, Inc. is a leading retailer of financial services, including payday loans, installment loans, title loans, check cashing, bill payment, wire transfer, money orders and prepaid debit card services. ACE is the largest owner and operator of check cashing stores in the United States and the second largest owner and operator of short-term consumer loan stores in the United States. ACE focuses on serving consumers, many of whom seek alternatives to traditional banking relationships in order to gain convenient and immediate access to financial services. For additional information about ACE Cash Express, visit

ACE Cash Express on Twitter and ACE Cash Express on Facebook

About Green Dot Corporation

Green Dot Corporation and its wholly owned subsidiary bank, Green Dot Bank, are focused exclusively on serving Low and Moderate Income American families with modern, fair and feature-rich financial products and services, including prepaid cards, checking accounts and cash processing services distributed through a network of some 100,000 retail stores, neighborhood financial service centers and via digital channels. The Company is headquartered in Pasadena, California with Green Dot Bank located in Provo, Utah.

Green Dot Corporation Contact:

Investor Relations

Green Dot Corporation

Christopher Mammone, 626-765-2427


Media Relations

ICR for Green Dot Corporation

Brian Ruby, 203-682-8268


ACE Cash Express

Victoria Daugherty, 972-550-5161

Communication Manager […]

'Not in public interest' to reveal how much of Omar Khan loan has been repaid, Council insists

‘Not in public interest’ to reveal how much of Omar Khan loan has been repaid, Council insists

Omar Khan

Jeanette Sunderland

Odsal Stadium

Omar Khan pictured at Odsal. ts rep hp (9638305)

First published in News
Last updated by Rhys Thomas, T&A Reporter

BRADFORD Council insists it is not in the public interest to reveal how much of a £200,000 loan of taxpayer cash to former Bradford Bulls owner Omar Khan has been repaid.

The authority granted the Super League club the cash shortly after restaurant boss Mr Khan took the helm at Odsal in September 2012.

Last March, Mr Khan vowed that the money would be repaid, shortly after the repayment was raised at a Council meeting.

And last month, Council leader Councillor David Green insisted Mr Khan had made some repayments, but refused to reveal how much or how much was left to pay.

The Telegraph & Argus submitted a Freedom of Information request to the authority on July 29, asking how much of the loan was still to be paid back, how much had been paid in each instalment, when the loan was due to be repaid, how many payments were left and how much each one was, and what interest the Council was charging on the loan.

But, three weeks later, the authority said: “The Council are exempting this information under Part 2 section 41 FOI Act – Information provided in confidence. This is because one of the clauses in the loan contains a confidentiality agreement, therefore the Council is exempt from disclosing this to the public as this would constitute an actionable breach of confidence.

“This exemption is absolute – there is no public interest test.”

A spokesman for Bradford Council added: “Following the change of ownership at the Bulls, after a period of administration, the Council agreed a repayment plan with the guarantor of the loan. To date, all payment obligations have been met.”

Councillor Jeanette Sunderland, leader of the Liberal Democrat group on Bradford Council, said: “It is a closed book. What are they being so secretive about, refusing to answer questions?

“I don’t understand why they are being so secretive. It was public money. The loan was made behind closed doors and has never been taken into a public arena – it should be looked at properly.

“Across the district people on very low income are being forced to pay Council tax and if they default just once the Council comes down on them like a ton of bricks.

“There is a difference between how they treat Omar Khan and how they treat Council taxpayers.”

She added: “They say the payments are being made as to the schedule. That must be a different schedule to the one I know about.

“It should have all been paid off by now.”

Cllr Sunderland added that she believed the matter should go before the Council’s Governance and Audit Committee.


Location, not cash, SC's loan player headache

Location, not cash, SC’s loan player headache


Last updated 05:00 23/08/2014

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The South Canterbury Rugby Union is happy to fund loan players on a case-by-case basis but the problem is location not money, according to chairman Brent Isbister.

Heartland coach Chester Scott has struggled to secure quality players this season and it appears money is a major sticking point.

Isbister said there was no “set in stone budget” for loan players.

“Board policy is that funding requests will be considered on their merits. The board have an open mind on loan players.”

The Heartland team management had discussed loan player funding with the union but there have been no specific requests as yet, he said.

“The potential player needs to be significantly better than what we have here already and at a reimbursement that is affordable and meets competition rules.

“Sometimes it is not easy to find that combination.”

Isbister said funding requests are also balanced between the need to fund community rugby and the desire to be a leading Heartland union.

The budget for running the 2014 campaign is $145,000. The Herald understands less than $4000 of that is targeted on loan players. Competition rules allow three plus a “player of origin”.

Isbister said money was often not the issue.

“Our location, two hours drive from Christchurch and Dunedin, for practice and games being a key impediment, as an example.

Isbister did not necessarily believe the provinces with the best loan players won.

“I wouldn’t agree every year that is the case but I would agree it is becoming more important.

“It was important when East Coast won [in 2012] but has had long-term financial ramifications for them.”

Isbister said ideally South Canterbury would field a winning team of locally grown players.

“The board is reviewing its high performance strategy to that end.

“We are also implementing specific initiatives to fund the Heartland team’s fortunes in future seasons thus increasing budget flexibility.”

In the past they had run a “try time” initiative through the Heartland team with the funds being used to support them.

“This has been picked up again this season and members of the public can support the team by donating an amount per try.”

There was also a chance to win prizes, he said.

Isbister said the union is also running a “Green and Black” club targeting former representatives on a subscription basis.

Three days before the Heartland Championship kicked off Scott secured the services of two players to face Wanganui.

Cook Island international lock Simon Marcel, who plays club rugby in Auckland, has signed on.

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Englishman Angus Compton-Bowyer, a first five who played club rugby in Hawkes Bay, will make his appearance off the bench.

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Beware fraudsters targeting the MoneyPak cash service


There may be nothing new under the sun, but when it comes to crime there are certainly variations on old themes.

A cash transfer product called MoneyPak has attracted online fraudsters who use old schemes to scam their victims. The product, sold by financial services company Green Dot (GDOT), has come under attention from the Senate Special Committee on Aging, which last month held a hearing about scams targeting the elderly.

MoneyPak cards are targeted toward “unbanked” and “underbanked” Americans, or the 34 million households who lack bank accounts or who have some type of account but still rely on services such as check cashing. The reason why MoneyPaks have caught on with criminals is that they carry a 14-digit code on the back that provide access to money that customers have place on the product.

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In some frauds, the criminals impersonate a utility or law enforcement official and claim their target owes money. They then tell the victim to pay up by loading money on a MoneyPak and giving them the 14-digit number. That allows the criminal to gain access to the funds loaded into the product.

Other scams involve criminals telling their victims that they’ve been pre-approved to apply for a loan, but first they’ll need to make payments, which can be made through a MoneyPak.

The scrutiny on MoneyPak comes as more Americans are relying on pre-paid money cards. In 2011, consumers loaded $57 billion on prepaid cards, a number that is expected to reach $167 billion this year, according to the Consumer Financial Protection Bureau, which cites data from Mercator Advisory Group.

And it’s not only MoneyPaks that are targeted by criminals. Americans lost more than $73 million to impostor scams last year, the Senate Committee on Aging said.

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While MoneyPaks aren’t pre-paid cards, they allow consumers to load up those cards with cash or add money to their PayPal account, without requiring a bank account. Consumers can also make same-day payments to companies with the service.

The 14-digit code is hidden under a scratch-off strip on the back of the card. That may be the service’s Achilles heel, since anyone gaining access to one of the codes can also get their hands on the money loaded on that card. Enter the fraudsters.

MoneyPak even warns consumers not to give out the code, cautioning in a red box around the scratch-off strip that anyone asking for the number could be scamming them.

The good news for consumers is that Green Dot is phasing out the service with a similar product called Reload @ the Register. The updated service eliminates the 14-digit codes and uses a “swipe” to load money for customers. Walmart (WMT) has already replaced its MoneyPaks with the newer service, the company said at the Senate hearing.

“Green Dot is committed to educating consumers about how to avoid becoming victims of financial fraud scams and has partnered with the Consumer Federation of America to help enhance these efforts,” Green Dot said in an emailed statement to CBS MoneyWatch.

It added, “Consumers should protect their MoneyPak numbers just as they would cash, and Green Dot makes vigorous efforts to remind consumers on the MoneyPak packaging and website never to give their information to a private individual, to someone claiming you have won a prize or lottery, or to pay for items purchased from classified ads.”

© 2014 CBS Interactive Inc.. All Rights Reserved.


Loan Scam Warning


The Better Business Bureau (BBB) serving Nebraska, South Dakota, The Kansas Plains and Southwest Iowa is warning consumers of a scam where phony lenders are making false promises to borrowers seeking loans in exchange for upfront fees.

BBB has received complaints from consumers who were victims of a Jamaican scam in which the lenders demanded cash up front and never provided the loans. The names being used in this scam are USA Cash Advance and Payday Loans of America.

Complainants state that according to the information they received, this business was located at 604 E North St in Rapid City, SD. Another address associated with this company is 2138 S Minnesota Ave in Sioux Falls, SD. One person paid $295, and another reported that she had sent $16,000 to this company. They were both asked to use Green Dot MoneyPak cards to transfer the “required” fees. None have received their loans or were they able to cancel them. The company just keeps asking for more money to process their refunds.

According to BBB President Jim Hegarty, “Unfortunately, many times the borrowers who fall into these traps don’t have many options because of their poor credit history or lack of collateral. Any time someone asks you pay in advance for a loan, it’s a scam because charging an advanced fee for a loan is illegal.”

A BBB investigation found that neither of addresses in South Dakota for the company were valid, and when the phone number, provided by the consumers, was called, a man with a heavy accent answered. He offered the investigator a loan and immediately sent an email stating, ”For $5,000 your monthly installment will be $242 for 24 month and we are located in 2138 s Minnesota AVE Sioux FALLS Sd 57103.” The investigator then received a phone call from a Jamaican phone number. The caller stated that he had her $5,000 loan even though she had not applied for a loan nor had she provided anything other than a phony name, email address and phone number.

Here’s how the alleged scam works: Consumers apply and get “approved” for loans online. They are then asked to “secure” the loan by paying fees under the guise of a variety of names such as interest fees, collateral or insurance costs on the loan or a broker’s fee. Consumers are then told to transfer the cash via Western Union or to purchase re-loadable prepaid card like Green Dot MoneyPak. “In many cases, the lender comes back multiple times asking for fees,” said Hegarty. “The ‘lenders’ never give out the loan. They disappear, shutting down their website and disconnecting their phones.”


Small Business Week Brings Special Loan Programs, Incentives from CDC Small Business Finance


In celebration of National Small Business Week (May 12-16), entrepreneurs can take advantage of special SBA financing programs offered by CDC Small Business Finance to buy their own building, expand their company and create jobs.

SBA Green Loan – this financing program provides higher lending amounts for small business owners who want to buy or upgrade commercial/industrial buildings and make them more energy efficient. Buildings over $20 million can be financed using this unique program offered jointly by a bank and CDC Small Business Finance. Small business owners need only demonstrate a projected 10% reduction in energy costs by deploying one or more energy-saving improvements (e.g. insulation, lighting, heating/air conditioning).

VetLoan Advantage Loan – military veterans who own small businesses can save up to $3,000 with this program. Incentives apply to several types of loans:

SBA-504 loans are used to purchase commercial/industrial buildings. Vets can take advantage of a low-down payment (typically 10%), long-term fixed rates (now 5.07%). CDC will issue a cash rebate up to $3,000 for any funded loan to help veteran owners offset loan expenses. Community Advantage loans provide up to $250,000 for working capital, equipment, inventory, tenant improvements and business acquisition. CDC will waive the packaging fee for veterans, a savings of up to $2,500. SBA Microloans provide up to $50,000 for working capital, equipment, inventory, tenant improvements and business acquisition. CDC will waive the 2% loan fee for veterans, a savings of up to $1,000.

“The doors are now wide open to small business owners who want to grow and expand their businesses,” said Kurt Chilcott, president/CEO of CDC Small Business Finance.

The SBA-504 loan program offers additional advantages, including:

Cash preservation Tax savings No balloon payments

To qualify for an SBA 504 loan, businesses must be:

Owner-operated For profit Organized as a sole proprietorship, corporation, partnership or LLC Have a business net-worth below $15 million and a net-profit after taxes below $5 million within the last two operating years Community Advantage is an excellent loan choice for new and existing businesses that need between $20,000 and $250,000 in business capital. The loan can be used to start or expand a business. The SBA guarantees a portion of each loan. This allows CDC to make loans that may not be available through banks. To be eligible, applicants need to show their ability to repay the full loan amount and meet other guidelines.

Small business owners can find out if they qualify for a loan by using the company’s Prequalify Today tool. For more information call 800.611.5170, visit or check CDC on Twitter @CDC_Loans and LinkedIn. To see short videos of small businesses that have benefitted from SBA loans, go to: SBA Success Stories.

CDC Small Business Finance, a non-profit, is the nation’s leader in providing SBA-504 loans to small businesses, including those that have traditionally struggled getting access to capital. Over 30 percent of CDC’s loans go to women-, minority- and veteran-owned small businesses.

In 36 years, CDC has helped more than 10,000 entrepreneurs buy their own facilities, expand their businesses and create nearly 130,000 new jobs.

Note: Media interested in interviewing small business owners who have received SBA-504 loans to purchase a building can contact Larry Nuffer, 619.243.8620,

Small BusinessesBusiness Contact:

CDC Small Business Finance

Larry Nuffer, 619-243-8620 […]

BBB Alert: Scammers use BBB's Name in Fake Loan Scheme


BBB’s Name Used to Entice Consumer to Pay an Advance Fee for a Personal Loan

(4-17-14) Better Business Bureau (BBB) serving Nebraska, South Dakota, The Kansas Plains and Southwest Iowa is warning cash-strapped consumers to beware of online lenders that require advance fees.

“Desperate times are leading people to the Internet to apply for loans and many are falling deeper into debt after getting tangled up with fictitious lenders who have little regard for the law,” said BBB President and CEO Jim Hegarty. “Consumers nationwide continue to be victimized by sophisticated loan scams that demand up-front fees for personal loans that are never delivered.”

An Arkansas City, KS woman, who has a history of searching for loans online, recently received a phone call from United Personal Only. She was informed that “they already had her bank account number on record and she qualified for a $5,000 loan that could be repaid at the rate of $141 per month.” The caller stated that United Personal Only is located in Houston, TX and is “listed with the BBB.”

Then, the consumer was told that she would need to pay $300 in advance to demonstrate that she was able to pay the loan back “because the BBB likes people to show that they can make payments on time.”

As instructed, the woman went to a Walmart and put $300 on a re-loadable pre-paid card called a Green Dot MoneyPak. She thought that she was setting up an account that would be used to transfer her loan payments. She was unfamiliar with how a Green Dot MoneyPak works and did not know that when she gave the caller the numbers on her card, the money could be accessed immediately. Such Green Dot transactions are extremely difficult to trace. Other phony loan companies have used Western Union or MoneyGram to obtain the payments.

After releasing the numbers, the woman was notified that United Personal Only needed more money for “insurance.” That’s when she contacted BBB. Although she closed her bank account, she is receiving numerous loan applications through emails and up to 6 phone calls per day from other online loan companies.

BBB investigators believe that United Personal Only is a fictitious business. It uses the same phone number as another company, United Personal Loans, which also appears to be fictitious. They claim to be located at 10970 West Hammer Road in Houston, but BBB has learned that this address is invalid.

“When setting up this phony company, the scammers probably used the name West Hammer Road because it sounds like Westheimer Road which is an actual street in Houston,” said Hegarty. “The address is meant to sound legitimate, when it is not.

“The bottom line is that it is illegal for companies to promise you a loan and ask you to pay fees in advance,” added Hegarty. “Also, if you are handing over your personal information to get a loan without doing your research, you could be setting yourself up to have your account drained by offshore scammers.”

If looking for a personal loan, BBB has the following advice:

Be wary of applying for online loans through unfamiliar businesses or websites. Many of these online application sites are run by scammers or by people who sell your information to scammers.Understand that requiring fees be paid as a condition of receiving a loan is illegal.Do not do business with anyone who cannot give you an address that you can confirm as legitimate.Read any contract carefully and make sure you understand all requirements before entering into any agreement.Official-looking loan documents and sophisticated looking websites are easy to copy or fake. Just because a business appears legitimate, doesn’t mean it is.Check for a BBB Business Review by going to or call 800-649-6814.

# # #


New scam targets payday loan customers – abc27 WHTM


Officials want Midstate residents to be on the lookout for a new scam in which the crooks will use convincing, fake court papers and even threaten to have the victims arrested if they don’t pay up.

Investigators at the U.S. Postal Service say the scam is a result of some sort of breach with one or multiple payday loan organizations. They say data such as contact information, birth dates and social security numbers may have gotten into the wrong hands.

Criminals will then use the information to contact the victim via Internet, phone, or mail to say that victims need to pay money or face prosecution, according to officials. The scammers will even send fake court papers purportedly from U.S. District Court.

“This is probably one of the more sophisticated one’s I have seen in my 19 years because of the layers involved in it, with the amount of work to substantiate what they are telling the victim,” Postal Investigator Nick Alicea said.

Often, officials say, the scammers will want victims to use prepaid Green Dot MoneyPak cards that leave virtually no paper trail.

So far there have been two reported cases in Pennsylvania, including one involving a Shiremanstown man, authorities say. There have been a handful of victims in New Jersey.

There’s no word yet on the scope of the scam.

Officials say it originated in India.

The FBI is also investigating.

Anyone who believes they may have been affected by the scam can contact the U.S. Postal Inspection Service’s office in Harrisburg at (717) 257-2330.