To be rich or stupid....

Sometimes when you do something extraordinarily stupid, the embarrassment is enough to drive the secret to your grave.  However, this is not something that should be buried, so I am using my embarrassment to educate all of you instead.  If I stop someone from repeating it, my mission is complete.

Last Thursday, I panicked because a checking account over drafted. To get my account in good standing, I needed $225 in 24 hours.  Every day the account was negative, I would be charged $5.00 up to an extended overdraft fee. Normally it would not have been a problem, but I’ve been short on cash lately and watching it tightly.  I didn’t have that money, and there was no place I could get it. Then I remembered one of those pay day, fast cash commercials on television.

After one application and a dozen e-mails just minutes after applying, I stopped.  The danger was obvious and the terms were ludicrous. Between the exorbitant interest rates and monthly fees, I was better off letting my account close. Thus, when I get lots of e-mail asking me to sign loan agreements and confirm details, I opened nothing and approved nothing.

Last night, I got an e-mail from a company claiming funds would be deposited in my account at midnight. It was clearly suspicious, so I made sure to check my account this morning. I didn’t find any deposits, but a fraudulent surprise was waiting for me. There was an electronic check for $30 from “Caprice Marketing, LLC” claiming to be an enrollment fee in their “payday loan program”.  It even listed the supposed day I authorized it.

I went to Webster Bank immediately at 9:00 and signed a forged/lost check affidavit to authorize them to dispute the charge.  For security purposes, they had to close my account (given the number of online people who could have the routing and account information by now).  When she tried to link my new account to the old ATM card, we discovered that fraud services had cancelled the card days earlier due to “uncharacteristic transactions.”  At this time, I don’t know what these transactions are, but it was suspicious enough to red flag the account.  (I am getting the exact details on Monday when the ATM division is open.)

I did some research on this and found some disturbing evidence of the extent of these loans. Complaint board after another talked about people never getting out of these loans, even when they were paid off.  The company would sneakily renew it, thereby keeping the fees and interest coming.  The company that fraudulently got me was a major source of complaints with the exact details of my story.  Some people never gave their bank information and had credit cards and checking accounts attacked.  One after another reiterated the same point: I never authorized this fee and I’ve never heard of this company!

So don’t believe these commercials when they say fast money is easy.  It is not safe, financially smart or efficient.  Despite the promises of money being in your account within the hour, most of them take 24 hours or even a week (one had to wait until next Thursday because my next pay day wasn’t until May 4^th and the repayment time was 14 days.)  It was a rip off.

So what should you do if these get you?

1. Go to the bank or call the credit card company as soon as the charge appears.  Dispute it immediately.
2. If you’ve used an online source to apply for a loan, count on it going to many lenders.  Close the account immediately to prevent further intrusions.
3. Do not call the companies to dispute the charge(s).  Trust your bank or credit card company to do the dispute process, as they are experts.  If the dispute fails, seek legal advice to contact the company.
4. No matter desperate you are, don’t get fast loans. You are better off letting the account draw charges than paying a loan shark. Talk to someone at the bank to find out your options if you can’t fix the negative balance in a reasonable amount of time.