How to Avoid Predatory Lending
Predatory lending uses confusing costs, pressure tactics or unlawful practices to trap borrowers in expensive debt. Payday loans are a high-risk category, so verification matters before you submit personal information.
Warning signs
- "Guaranteed approval" with no income or state eligibility review.
- Upfront fees requested by gift card, wire transfer, Zelle, Cash App or cryptocurrency.
- No clear APR, finance charge, total repayment amount or due date.
- No visible privacy policy, terms, license information or complaint contact.
- Threats of arrest, criminal charges or illegal wage garnishment.
- Pressure to roll over or refinance repeatedly.
How to verify a lender
- Check the lender's exact legal name, not only its marketing name.
- Search the official state regulator database where you live.
- Compare the disclosed fees with state caps or restrictions.
- Read the privacy policy and complaint process before submitting sensitive data.
- Search for enforcement actions or consumer alerts from regulators.