Payday loan scammers are learning a different meaning of the word “payback.”

The Federal Trade Commission has helped to bring down a ring of crooks that targeted cash-strapped consumers with payday loan scams. Responding to charges brought by the agency, a U.S. District Court recently shut down an operation based in Tracy, Calif., by freezing its assets. The scam allegedly involved more than 2.7 million calls to 600,000 different phone numbers. According to the FTC, the fraud ring collected more than $5.2 million from consumers who were led to believe they were paying off payday loans. But the debts were phony.

Payday loan scams can harm victims financially, but they can also be devastating emotionally. One consumer reported that a caller threatened to have her children taken away if she did not pay, according to court documents.

Savvy thieves convince victims to wire more than hundreds of dollars with little resistance. One of their tried-and-tested techniques is pretending to be affiliated with law enforcement agencies ranging from the local police to the FBI. One consumer told the FTC, “The callers threatened me and claimed they would arrest me if I didn’t pay them the alleged debt.”

Sometimes the tactics go beyond mere intimidation and become outright threats. Thieves log on to Google Earth to spy on targets. One victim reported: “One of the callers even contacted my neighbors and told me he was watching my house,” according to court documents.

Scammers also pose as members of government agencies so secret they exist only in The Twilight Zone. One dubious example is the “Federal Crime Unit of the Department of Justice.”  Sometimes fake collectors grab up personal information including bank account numbers.

Fortunately, these callers often give themselves away without even realizing it.  A caller can become suspicious if he or she:

1.    Seeks payment on a debt for a loan you don’t remember making
2.    Refuses to give you a mailing address or phone number
3.    Asks you for personal financial or sensitive information
4.    Threatens to have you arrested or to report you to a law enforcement agency to get you to pay

The callers usually demand several hundred dollars and call homes and businesses repeatedly. One customer turned to an Identity Theft 911 fraud specialists for help after his business lines were tied up by bogus calls for hours.

If you’ve been contacted by payday loan scammers, get in touch with your state’s attorney general’s office.

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