Payday loans are big business. In some cities, there are literally dozens of payday loan businesses. This has spurred a reaction from many folks in the community that don’t agree with these lenders or their high-interest, short-term loan practices. They wind up petitioning their local governments who then make zoning law changes that in effect prevent new payday loan businesses from starting up.
Unfortunately, just because there isn’t a brick and mortar payday loan store in your town doesn’t mean that there aren’t people who want and need short-term loans. So, many of these folks will turn to the Internet.
There are plenty of payday loan companies on the Internet. Today, there are a greater number of more Internet-based payday loan providers than there have ever been. Many of these businesses are legitimate, to be sure, even if their fees and interest rates are much higher than what consumer advocates think they should be.
There are also plenty of scam artists out there. There is the case of a woman in Maryland who wound up paying nearly $1,000 to a scam artist who promised to then loan her $5,000. Needless to say, the loan never happened and the woman wound up in more dire financial straits than she was before she turned to the online payday lender.
Part of the problem is that consumers just aren’t educated enough, in some cases, to recognize a payday loan scam online. You need to understand that any legitimate online payday loan company isn’t going to ask for any money upfront. The fee that you pay for the loan will be taken out of your checking account at the same time the amount you borrowed is taken out – usually about 14 days after you take out the loan.
Ultimately, online payday loan (like most things in life) are a case of buyer beware. You need to make sure the business you’re about to work with is a legitimate business, and that they’re following the law. If you suspect that a payday lender is illegitimate, you can also report it to the Federal Trade Commission.