Payday Loan Consolidation Scams: How to Avoid Them

If you’re stuck in payday debt and interested in payday loan consolidation programs, you’re on the right track.

Payday loan consolidation programs or loans allow you to combine all your loans into a single, lower interest loan.

However, you also need to watch out for payday loan consolidation scams.

The payday industry is full of hucksters and scammers. Tribal lenders that break the law, and companies that pretend to be helping, only to take your hard-earned money away.

Looking to consolidate your loans?

Don’t fall into another scam. We’ll help you pick a legit consolidation company that best suits your needs.

Are Payday Loan Consolidation Companies Real or a Rip Off?

There are certainly a few legitimate payday loan consolidation companies out there that genuinely help their clients reduce their overall debt. On the other end of the spectrum, there are also payday relief companies that are scammers. And in the middle, you have debt consolidation companies that are legit, but don’t help as advertised for every situation.

Picking a consolidation company isn’t easy, but that’s what we’re here for. We recommend DebtHammer, which works with debts of all sizes and only takes on clients they can help.

If you’d like to talk to a human who can help you choose the best program for you, feel free to request a free consultation here and we’ll do our best to help.

5 Ways to Tell a Payday Loan Consolidation Scam

1 – Bad Better Business Bureau Ratings

The first place to go to see if a consolidation company is legit is the Better Business Bureau.

Now you should realize, not every company is going to have pristine reviews, especially in this industry. But a legitimate consolidation company or lender will at least respond and attempt to resolve all the reviews. If a firm doesn’t bother to respond to disputes, or there are too many reports of scams, than run. This is likely a consolidation scam.

2 – Are They Just a Middle-man?

The payday industry is full of middle-men called ‘lead generators’. These companies don’t actually give out loans or consolidation, they just use internet marketing to capture contact info, and sell it to the highest bidder.

Usually these lead gen sites will advertise as if they are a company, but really are a referral service. For example, check out this disclaimer on Solid Ground Financial.

This doesn’t necessarily mean that they are a scam. But, you need to vet the loan provider that you are actually dealing with. You can’t trust these middlemen to vet them.

3 – Tribal Affiliations

If you see the mention of any Indian / Native American tribe, you can rest assured that this is not a legit consolidation company.

Sometimes they will claim they have a ‘license’…but it’s not granted to them by the government…no it’s granted by the Indian Tribe.

Be sure to Google the address as well. If it’s on Tribal Land, run.

Payday loan scammers often use “tribal immunity” to break the laws. So if you see anything related to an Indian reservation, run!

4 – No Real Business Records

If you can’t find any records of the business, it’s probably a scam. Or a middleman at best. Any real business will have an address and an official business name which you can use to look them up in whichever state they claim to operate in.

Even scammers can get an LLC – it takes 10 minutes to setup on Legal Zoom after all. So if this so-called consolidation company doesn’t have a business record…it’s a scam.

5 – No Lending License

Not all payday loan consolidation companies offer loans, but the ones that offer debt consolidation loans are required by law to have a lending license. Usually there will be a license record on their website, but that can be faked. So go to your state’s licensing website and be sure you can look up the business name. Here’s an example for the state of Texas: https://occc.texas.gov/industry/regulated-lenders

No license? Probably a scam.

6 – No address

If there isn’t an address that you can find about the company, than run. It’s that simple. Any legit firm will have an address on their website. And of course, be sure to look this up on google maps as well. No address? Probably a scam.

Consolidating your payday loans is a good idea, but beware of debt consolidation scams. They are around every corner.