‘Fraudster preys on the poor:’ an all too familiar story

July 17, 2018 5:30 am

A recent headline from Lawyers Weekly (referencing a Richmond Times-Dispatch article) reads: Fraudster preyed on the poor.

“A self-proclaimed credit consultant has been sentenced to 12 years in prison for ripping off debt-troubled customers in Chesterfield County,” the story says.  

As any legal-aid attorney will tell you, this is a familiar story.  Fraudsters prey on those that are vulnerable: the sick, the elderly and, of course, the poor.  If you are “debt-troubled,” you are vulnerable to credit-repair schemes, debt-settlement scams and perhaps worst of all: payday loans.  

Among the biggest predators in Virginia are out-of-state internet lenders.  They prey on Virginians who are desperate for money because they got laid-off or got sick and couldn’t work or had their hours cut at work.  It’s easy to go to the internet and get “fast cash” without having to seek help elsewhere. But the minute you apply for that internet loan, your troubles begin.

When you apply for an internet loan, your Social Security number, address, phone number and bank account information are likely sold to many buyers.  Some of those buyers will be scammers who won’t loan you money but con you into giving them money. Other scammers will simply take money from your bank account.

If you get an internet loan, the lender debits your bank account for the monthly or bi-weekly loan payments on your loan.  You can’t afford the payments for long (who could possibly afford a loan with 300 to 700 percent interest?) and soon they are debiting more and more money and now you can’t pay your rent.  You might get a second loan to the pay the first and a third loan to pay the second. Years after getting an internet loan, you get calls from scammers who claim you didn’t repay the loan and, unless you pay immediately, you will be arrested or they will tell your employer you are a deadbeat.   

How do I know so much about internet loans?  I have talked to hundreds of people from all over Virginia who  call us for help getting out of these loans I partner with other attorneys and we sue many of these lenders for making illegal loans in Virginia.  During litigation, we learn about their awful schemes to exploit the poor.  

Virginia could do a lot more to put a stop to internet loan exploitation.  The General Assembly rejected legislation earlier this year that would have subjected internet lenders to new restrictions in Virginia, including interest-rate caps.

But we will be back again in 2019.

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Jay Speer
Jay Speer

Jay Speer is executive director of the Virginia Poverty Law Center, a Richmond nonprofit committed to leading and coordinating efforts to seek justice in civil legal matters for lower-income Virginians.