Last week, a consumer called the BBB of North Alabama to report receiving an unsolicited mailing from CashNet USA. Enclosed was a check for $2,000 with terms stating the interest rate was 299%. If the consumer cashed the $2,000 check, he would have to pay back $5,980 in interest plus $2,000 principal, for a total of $7,980.
CashNet USA is a lender that claims to provide short-term, small principal payday loans and lines of credit. The Better Business Bureau report reflects an A- rating with 188 complaints and 26 negative reviews. The company also had a Government Action filed against them in 2015 by the Commissioner of Business Oversight of the State of California for allegedly charging customers unlawful interest. In addition, the Commissioner reported that the company was electronically debiting customer accounts for more than the original agreed upon amount without additional written authorization from customers.
Be cautious with any loan solicitation that you receive. Be sure to read the fine print and do your research before committing to any loan. The Federal Trade Commission also offers tips to consider before taking out any loan:
- “Consider a small loan from your credit union or a local loan company. Some banks may offer short-term loans for small amounts at competitive rates.
- Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs. You are looking for the lowest APR.
- Contact your creditors or loan servicer as quickly as possible if you are having trouble with your payments, and ask for more time.
- Contact your local consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget. Non-profit groups in every state offer credit guidance to consumers for no or low cost.
- Make a realistic budget, including your monthly and daily expenditures.
- Find out if you have — or if your bank will offer you — overdraft protection on your checking account. If you are using most or all the funds in your account regularly and you make a mistake in your account records, overdraft protection can help protect you from further credit problems.”
When seeking a loan, always check with your bank and local companies first. They will typically have the most competitive rates. If you receive a loan solicitation via mail or email, always read the terms and conditions as they could have hidden fees or very high interest rates.
Source: BBB of North Alabama and Federal Trade Commission. United States Federal Trade Commission, www.ftc.gov – not subject to copyright protection. 17 U.S.C. 403. To report a scam, go to the BBB Scam Tracker. To find trustworthy businesses, go to https://www.bbb.org