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How to Protect Yourself from Payday Loan Call Scams

Written by
Alex Huntsberger
Alex Huntsberger is a personal finance writer who covered online lending, credit scores, and employment for TheLending. His work has been cited by ESPN.com, Business Insider, and The Motley Fool.
Read time: 5 min
Updated on October 10, 2023
man with beard and glasses with advice on how to protect yourself from payday loan call scams
Scammers may intimidate you and collect on unpaid payday loans that—surprise twist—you never borrowed in the first place!

If you have an unexpected bill and you’re considering a payday loan as a solution, you may want to reconsider. No matter how imposing that bill seems to be, these short-term, high-interest loans may jeopardize your finances in the long-term. There are likely better ways to pay for emergency expenses.

However, even if you decide not to take out a payday loan, you may still find yourself in a challenging situation. A scammer could get ahold of your information and try to collect on a loan you never borrowed. Here’s how payday loan call scammers work, and what you can do to fight back.


What is a payday loan?

Payday loans are a type of no credit check loan aimed at those with low credit scores and often lower incomes. Payday loans are usually a few hundred dollars and are designed as an “advance” on the borrower’s paycheck. This is how they got their name Payday loans; due to the repayment date aligned with the borrower’s next pay day. Payday loans can also be referred to as "cash advance" loans for the same reason.

Payday loans have an average term length of only two weeks, but they come with an average APR of almost 400%! For instance, a two-week payday loan with a flat-rate interest charge of 15% works out to an average annual cost of 391%. As you can see, small weekly rates add up over time.

There are two ways you can apply for a payday loan. The first is by walking into a payday loan storefront and filling out an application.

The second way is to fill out an application online by visiting the lender’s website, provide your information, and “submit” the application. That’s where you may encounter potential problems.

How payday loan call scams work

Often when applying for an online loan, rather than doing so on the lender’s website, you submit the application to a lead generator, that then sells your information to lenders seeking potential clients.

Even if you don’t end up taking the payday loan that you applied for, a record of your application was created that may contain personal information, including the loan amount. That record could be purchased by scammers.

In the unfortunate event that your record is purchased, these scammers may contact you to try and collect on a debt you never owed. They may pretend to be a representative from a payday loan company. Sometimes they may even claim to be a lawyer for the company or pretend to be from a government organization.

Once they have you on the phone, scammers might make threats to bully you into paying. They may yell and threaten to sue you or garnish your wages. Scammers may resort to tactics such as promising to call your friends, family members, or your employer to embarrass you into paying. They might even threaten to have you arrested! In short, they may do everything they can to pressure you to pay.

Protecting yourself from a payday loan call scam

If you are contacted by someone you suspect is a scammer, it is advisable to ask for written confirmation that you owe a debt. Any caller who refuses to provide a written proof is probably a scammer. However, if they do provide a written record, you can check it against your own records. For instance, you can request a free copy of your credit report to see if this collection notice is listed.

Additionally, ask for the caller’s and business’s information. Request the:

  • Caller’s full name
  • Company name
  • Company address
  • Company phone number

Scammers usually won’t give you this information. If they do, quick research should reveal whether or not the company is legitimate. Legit debt collectors, on the other hand, should willingly provide their business information when it is requested.

It is important to remember not to share your personal information while collecting necessary details from them. This is a tip that holds true for all phone scams; do not give your personal information (account number(s), social security number, etc.) to anyone who calls you over the phone.

Even if the scammer can’t get you to pay the fake debt, they might be able to steal your identity with the information they get from you. That is why it is crucial not to share your personal information with them.

Lastly, report them. File a complaint with your state attorney general’s office, the Consumer Financial Protection Bureau (CFPB), and/or the Federal Trade Commission (FTC). Local police may not be able to assist if the scammer is out of their jurisdiction, but these larger agencies might be able to take action against the offender.

With their sky-high interest rates and large lump-sum payments, payday loans are bad enough on their own. Don’t let scammers turn a moment of desperation into greater financial hardship.

Please note the below article contains links to external sites outside of TheLending and Opportunity Financial, LLC.  These sources, while vetted, are not affiliated with TheLending. If you click on any of the links you will be sent to an external site with different terms and conditions that may differ from TheLending’s policies. We recommend you do your own research before engaging in any products or services listed below. TheLending is not a subject matter expert, nor does it assume responsibility if you decide to engage with any of these products or services.

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