Consumer Tip: Watch out for Phantom Lenders

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Recently the Federal Trade Commission shut down a business that was accused of using deceptive tactics to collect on phantom payday loans (a fake debt that a consumer is led to believe he or she owes). Here are three tips from the FTC for avoiding this type of scam:

1) If someone calls to collect on a debt you don’t recognize, request the caller’s name, company, street address, and telephone number. Refuse to discuss the debt until you receive a “validation notice,” which includes the amount of the debt, the name of the creditor you owe, and your rights under the federal Fair Debt Collection Practices Act. Send a letter requesting the caller to cease contact.

2) Don’t provide the caller with personal financial or other sensitive information.

3) Tell your creditor about the suspicious calls and find out who (or if) the creditor has authorized someone to collect the debt.

4) Alert the FTC and your state Attorney General’s office about the suspicious call.

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