Illegal Online Payday Loans 'Running Wild' in VA?
June 9, 2011
RICHMOND, Va. - Online payday loans are illegal in Virginia, but that hasn't stopped some companies from offering them. The practice has become widespread, according to a consumer advocacy group.
The Virginia Partnership to Encourage Responsible Lending has received a steady stream of calls from Virginians who suspect foul play. In response, it has set up a hotline where consumers can report suspicious activity and get information.
Dana Wiggins, the group's responsible-lending coordinator, says it's legal to search for a lender online and even fill out an application - but closing the deal has to happen face-to-face.
"A lot of people are searching online for that anonymity that the online lending provides because they don't have to even go into the store. Nobody might even see them trying to get one of these loans. So, there is sort of an allure to using just the Internet to access payday loans."
In most cases, Wiggins says, applicants for online payday loans are anything but anonymous because they provide personal data such as a Social Security number, employer information, phone numbers and address, which then are sent to what is known as a "lead generator site."
"And then that lead generator site, as well as many of the other companies that often give them the loans, will sell their information to other people as another way of making money off of those borrowers. That often opens them up to a higher risk of identity theft."
Wiggins advises Virginians to monitor their credit. A good and free source is annualcreditreport.com, which provides information from the three major consumer credit bureaus.
Consumers are encouraged to call the Virginia Partnership to Encourage Responsible Lending hotline at 866-830-4501 for free advice, especially if they think they got an illegal Internet payday loan or car title loan in late 2010 or early 2011.