A collection scam involving calls to consumers about alleged past payday loan debts has surfaced in Nebraska, just a week after a similar illegal operation was reported in Minnesota.

The Nebraska Department of Banking and Finance reports the operation uses various company names as the source of the old payday loan debts and for the collection agencies supposedly represented. The scammers avoid using the same company name in separate calls to avoid identification. 

The scammers allegedly are  threatening consumers with arrest if they don’t make an immediate payment and  often require a form of electronic payment by credit card, debit card, prepaid money card or ACH to complete the transaction quickly. The callers are often able to display a local area code but are actually located in a different state or country.

The Department of Banking and Finance is warning consumers to be alert for the following signs that a call is part of a collection scam:

  • Aggressive language and demand for immediate action.
  • Refusal to send proof of debt.
  • Caller states they are in a legal department and can’t transfer the call to another department, manager or company personnel. 
  • Debt is reported as from more than five years ago.

Last week, the Minnesota Department of Commerce reported complaints from consumers about callers falsely claiming to be affiliated with legitimate agencies “Advance America” or “Cash Advance.” State officials  and agencies in other states are working to identify and track down the people behind those fraudulent calls and emails. Minnesota has been at the forefront of states when it comes to payday loan regulations, including  battling online payday lenders. Minnesota Attorney General Lori Swanson has filed eight lawsuits against online lenders since 2010 and has obtained judgments or settlements in each one.Fifteen states and the District of Columbia have effectively banned payday lenders. The U.S. military bans payday lenders from its bases. Nine of the 36 states that permit payday lending have tougher standards than Minnesota.

Some online payday lenders try to evade state lending and consumer protection laws by operating without state licenses and claiming that the loans are only subject to the laws of their home state or country. In 2013, the Internet payday loan industry had estimated loan volume of $15.9 billion.


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