RICHMOND, Va. - Attorney General Mark Herring is warning Virginians to be careful about new scams.
It targets those who have been furloughed because of the government shutdown or those who wish to help federal workers.
These could include fake employment offers for side jobs, predatory lenders taking advantage of temporarily unpaid Virginians, and fake charities claiming to be working on behalf of federal workers.
Here is the full list of what to watch for:
Fake Employment Offers
• Be wary of emails that appear to be from major retailers offering positions at local stores unless you've applied for a position, use caution when proceeding.
• Cross-reference any emails with the company's website to see if they have openings.
• Watch out for imposters using the names of real employees at legitimate businesses.
• Be wary of interviews conducted through Hangouts, Skype, or Facetime.
• If using sites like Craigslist to find a job, use the "too good to be true" rule of thumb. If it sounds too good to be true, it probably is. Here are a few warning signs to look for:
• High pay rates for simple tasks
• Receiving a Job offer without an interview
• Requesting up-front payments and personal information
• Contact information and address are missing and an online search doesn't turn up the company's name
• Never provide your Social Security number or personal information unless you are certain the company and job offer are legitimate.
• Most legitimate companies do not ask for personal information over email or by unsolicited phone call.
• Never reply to a suspicious email or provide personal information to an unsolicited phone call.
• Familiarize yourself with the risks associated with small-dollar loans including payday, auto title, open-end, and online loans, and understand your rights when taking out one of these potentially risky loans.
• Payday Loans
• Limitations on interest and other fees—Interest on a payday loan is generally capped at 36% annually. Lenders may not charge more than 20% of the loan proceeds as a loan fee, and may only charge a $5 verification fee for checking the state’s payday loan database prior to issuing a loan. For a one-month loan of $500, the total APR will be 288%.
• Length of loans—The term of a payday loan must be at least twice the borrower’s pay cycle so they have a better chance of repaying it. After that time, lenders cannot charge interest of more than 6% per year.
• Loan amount—Lenders cannot loan more than $500 to a borrower.
• Number of loans—Lenders cannot issue more than one loan at a time to a borrower.
• Number of loans in a 180-day period—If a borrower receives and pays off 5 payday loans in a 180-day period, there is a mandatory 45-day cooling off period when a lender cannot issue another loan to that borrower.
• Loans to military personnel—Lenders cannot make a payday loan to a borrower who is a member of the armed forces or one of his or her dependents.
• Auto Title Loans
• Interest—Title lenders can charge interest based on the following sliding scale:
• 22% per month on the first $700 in principal;
• 18% per month on any amount above $700 up to $1,400; and
• 15% per month on any amount above $1,400.
• For a one-month loan of $500, the total APR of the loan will be 264%.
• Length of a loan— The loan term must be between 120 days (four months) and one year.
• Number of loans—Only one loan may be issued at a time to each borrower, or on each title.
• Amount of loan—The amount loaned cannot exceed 50% of the value of the vehicle.
• Post-repossession protections—After default, a lender generally may only repossess the vehicle. They cannot continue to charge interest on the loan.
• Loans to military personnel—Lenders cannot make a title loan to a borrower who is a member of the armed forces or one of his or her dependents.
• Open-End Credit Plan Loans
• Lenders are increasingly exploiting a loophole and steering borrowers towards open-end credit plans that afford borrowers very few consumer protections and can expose borrowers to unlimited interest rates.
• These loans can be offered by both online and brick-and-mortar lenders, often using phrases like “line of credit” and “cash advance.”
• While open-end credit loans might look like more traditional loans, open-end credit lines can stay open for an unlimited amount of time and lenders can often charge unlimited interest.
• One of the few consumer protections in this area is a 25-day “grace period” during which the borrower has an opportunity to pay off the loan without interest or other finance charges, but once the 25-day grace period expires, a lender can charge an unlimited interest rate.
• Online Loans
• Online loans are generally subject to Virginia’s “usury statutes” which limits them to a 12% interest rate. If the interest rate is higher than 12% you should avoid taking out a loan and report the lender to Attorney General Herring’s Consumer Protection Section.
• Be wary of closed-end installment lenders that operate online and make loans to Virginia consumers because they are not required to be licensed by the SCC under current law.
• Alternatives to Predatory Loans
• Before obtaining a potentially predatory loan from a non-traditional lender, consumers should consider their other alternatives.
• Traditional lenders—See if you can meet your needs through a traditional lender such as a bank, credit union, or consumer finance company, which typically will have a longer term and lower interest rates. Even if it is a small amount, a community bank or credit union may be willing to loan you the money you need.
• Credit card cash advance—If you have a traditional credit card with remaining credit available, obtain a credit card cash advance, which will often have a lower interest rate than that offered by a payday or motor vehicle title lender.
• Negotiation with creditors and companies—If you need money because you are having temporary trouble keeping up with routine bills, speak with your creditors, explain the financial difficulties you are having, and see if they will let you enter into a payment plan to take care of what you owe them.
• Personal connections—Consider whether you can get a temporary loan from family, friends, your congregation or place of worship, or a local charity.
• Military options—If you are in the military, check with the applicable military aid society to see if they have any financial assistance programs that could be of use.
• Authorized overdraft—Some banks will allow an authorized overdraft that may be preferable to taking out a risky loan that could saddle you with debt for months or years. If you utilize this option, be sure you understand the associated limitations, rates, or penalties.
• Only give to charities and fundraisers you can confirm are reliable and legitimate. Scrutinize charities with consumer advocates or friends and find out how much of your donation will go to the charity's programs and services.
• Be especially cautious if you do not initiate the contact with the charity.
• Do not be pressured into giving. Legitimate organizations will not expect you to contribute immediately.
• Ask for written information about the charity, including name, address, and telephone number. Legitimate organizations will give you materials about the charity's mission, how your donation will be used, and proof that your contribution is tax-deductible. Just because a "charity" has a tax identification number does not mean your contribution is tax-deductible.
• Avoid cash donations. Make checks payable to the charitable organization and not to an individual collecting a donation. For security and tax record purposes, you may wish to pay by credit card.
• If a charity is soliciting contributions in Virginia, verify its registration with the Virginia Department of Agriculture and Consumer Services' Office of Charitable and Regulatory Programs (OCRP) at (804) 786-1343, or by searching OCRP's Charitable Organization Database online.
• While a legitimate charity should be registered with OCRP to solicit contributions in Virginia, registration alone does not mean that the organization will be effective in aiding people affected by the government shutdown.
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