Loans...

There are an increasing number of online loan schemes affecting Vermont consumers.  An increasing number of money lenders operate solely via the internet (or use spam email, pop-up ads, or text messages), offering “EZ cash” or “Quick access to cash, no credit check” or “No credit? No problem!”  Many of these offers are fraudulent, some purport to originate from Vermont.  While some fraudulent loan offers can appear to be legitimate, there are steps you can take to protect yourself.

First and foremost, try to avoid online loan schemes altogether (if it sounds too good to be true, it usually is), and seek out other alternatives for money management.  The Federal Trade Commission offers helpful advice and alternatives

Is the lender licensed to do business in Vermont?

Unless it is a federally-regulated entity, a lender operating in Vermont or lending to Vermont consumers must be licensed with the Vermont Department of Banking. You can check the licensure status of a lender online on the Department of Financial Regulation's website. You can also check online to see if a lender is on the Department of Banking's Unlicensed Lender List.

Is there a fee you have to pay before you receive the loan funds?

This type of loan, one that requires a payment up front from you prior to disbursing funds, is unlawful in Vermont. Do not pay any money up front for a loan. If a lender wants you to wire money prior to receiving your loan, cease contact with the lender.

Is it a pay day loan?

Pay day loans (short terms loans with very high interest rates) are also generally unlawful in Vermont, as their interest rates often conflict with Vermont usury laws.

What you should do:

• Cease all electronic payments immediately, by sending written notice to the lender stating that you rescind authorization for electronic payment and requesting that all payments stop immediately. 
• Provide a copy of the notice to your bank and request that all electronic payments to that lender also be stopped by the bank.
• Ask for a “payout statement” or “alternative payout” (i.e., a way to pay off the loan)
• Collect as much information as you can from the lender (their place of business, their contact information, ask for all documents pertaining to your loan).
• It is unlawful for the payday lender to harass you to collect the loan.  Visit our Debt Collection page for more information.
• Contact us with questions or file a complaint.

I submitted an online loan application, how do I protect against identity theft?

If you have submitted a loan application online, or wired money to a lender, you should take immediate steps to protect yourself from identity theft such as:

• notify the wire transfer company (if you have wired funds) of the fraud immediately.  If the funds have not been picked up, you may be able to stop the transaction. 
• file a report with local police,
• contact your bank and credit card company to advise them that your account information may be compromised,
• place a security freeze on your credit files,
• file a complaint with CAP, including the website address for the online "lender".

You may find more information about protecting yourself from identity theft on our Identity Theft page.

Last modified August 13 2012 12:24 PM