FTC Takes Action in Pay Day Loan Scam, Financially Vulnerable Consumers Should Be Vigilant Of Others
On February 20th, the Federal Trade Commission (FTC) announced victory, at least temporarily, in halting unauthorized credit card transactions involving thousands of consumers. The scammers charged credit cards for non-existent goods and services totaling more than $25 million, targeting financially vulnerable consumers who had at some point prior to the transaction, applied for a pay day loan. Consumer advocates see this as a red flag that other scammers are sure to follow suit.
According to the FTC complaint, victims of the scam orchestrated by Ideal Financial Solutions had never contacted the self-proclaimed “debt relief service”, nor authorized debits to their bank accounts or credit cards when the company placed a charge, usually for about $30, on their account. Victims who disputed the charges were then told these related to financial counseling or loan matching services, or obtained assistance in completing a payday loan application. What is still unclear is how Ideal Financial Solutions acquired the consumers’ financial information, however it was discovered that several victims had recently applied for payday loans online. Pay day loan companies regularly sell that same personal financial data to others for a fee.
Consumers, specifically those who have secured pay day loans via the internet, are urged to check and re-check bank statements and identify any transactions that are not recognized. According to the FTC, victims of the Ideal Financial Solutions suffered significant impact from the transactions placed, including overdrafts and institutional penalties, that caused other bills to be unpaid and a lower credit rating of affected consumers.
If any consumer learns that they have been affected by this scam, they are urged to contact their bank or credit union to dispute the charges immediately. For additional protection of sensitive information, consumers should check their credit reports for free at www.annualcreditreport.com and contact a consumer advocacy lawyer as soon as possible to reverse the impact as quickly as possible.