Better
Business Bureau serving Eastern North Carolina is warning cash-strapped
families to beware of payday lenders that request sensitive financial
information online as a requirement for loan approval.
On August
9, BBB received the first complaint against Select Platinum Credit, an alleged
credit service provider claiming to operate from a Rocky Mount, NC
address. The complainant claimed that an
unauthorized charge of $49.99 appeared on her bank statement from this
company. Within two weeks of the first
complaint, BBB received 20 complaints of unauthorized charges against the same
business from consumers across the nation.
The common trend among all complainants was that the recipient of the
charges had applied for various payday loans online, providing sensitive
financial information including their bank account number and their digital
signature with a mouse. The North
Carolina Attorney General’s office issued a cease and desist order against
Select Platinum Credit on Wednesday, August 25.
The
charges of $49.99 have been traced back to the payday lender, Freedom
Subscription, based in Las Vegas,
NV. Freedom Subscription is operating under 26
different business names including SVM, Inc., Platinum Royal Customer Service,
and Belfort Capital Ventures Inc. This
business has received over 200 complaints within the last 36 months and has a
BBB rating of ‘F’ due to their failure to obtain a required competency license,
concerns with the industry in which this business operates, the number of
complaints filed against this business, and the business’ failure to respond to
complaints.
By
completing online payday loan applications similar to Freedom Subscription’s, consumers
are exposed to unauthorized charges from unknown sources, as well as privacy
and security risks. Many complainants
have also noticed that once they had provided bank account numbers, it became
increasingly difficulty to contact the lenders with questions or disputes.
“The
bottom line is if you are handing over your bank account information online to
get a payday loan without doing your research, you are setting yourself up to
pay hundreds and even thousands of dollars more than you bargained for,” said
Beverly Baskin, President and CEO of BBB serving Eastern
North Carolina.
“Consumers
turn to payday loans for a financial lifeline only to find themselves pulled deeper
into debt,” Attorney General Roy Cooper said. “We’ve chased payday lenders out
of North Carolina,
but unfortunately they continue to lurk online.”
When looking for a payday loan online, BBB recommends consumers:
- Payday loans are not legal in North Carolina, and the Attorney General’s
Office has shut down all known payday lenders operating in the state.
Also, North Carolina
law makes it illegal to charge an advance fee for promising to arrange a
loan or credit card.
- Consider other options. Payday loans can be
extremely expensive if you are unable to pay the loan off quickly. The
Federal Trade Commission recommends looking into a short term loan from
your bank, contacting your current creditors quickly to explore payment
options, working with a credit counseling center or at the very least,
shopping around for the best interest rate and terms. Because of concerns
with online lenders, try to find a physical location and specific contact
before settling on a lender.
- Look for red flags. Unscrupulous online
lenders often do not provide their location or contact information. Be
cautious of any lender that is only interested in your bank account number,
and doesn’t request other background information. Never give your bank account information
to an online entity with which you do not have an established
relationship.
- Research the lender with BBB. Check an online payday
lender’s BBB Reliability Report at bbb.org before you hand over any bank
account information. BBB Reliability Reports are free-of-charge
and will tell you how many complaints BBB has received, how, or if, the
company responded to complaints and BBB’s letter-grade rating.
For
additional information and advice you can trust on payday lenders, start with www.bbb.org.
