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Action 9: Woman thought she was applying for payday loan, lost $280

CHARLOTTE, N.C. — A woman wanted extra spending cash for the holidays and she thought she landed a loan.

Instead of getting thousands, Karen Davis said she lost hundreds of dollars.

Davis is a nurse and even with a solid job, she was strapped for cash. She needed money to fix her car, pay off bills and buy Christmas gifts.

She went online and applied for payday loans, short-term loans that usually have high interest rates instead of requiring collateral. Someone emailed her back.

"I was excited," she said.

Davis said the person claimed to be with Advance America and was willing to offer her a loan, but needed proof she was good for the first payment.

She said the email instructed her to get a MoneyPak card and put about $300 on it, call a phone number and provide the number so the $300 could be verified.

Davis said she did that, but instead of verifying the money, someone stole $280 of it.

"I was furious," Davis said. "I was fuming."

Davis said she filed a police report. However, when Action 9 called Advance America, the business said it doesn't do business in North Carolina or South Carolina, so the person Davis dealt with was probably a scammer pretending to be with the company.

"It does tarnish the reputation of the good actors, but, worst of all, it's bad for consumers," said Jamie Fulmer with Advance America.

That's why the business is pushing for new laws to regulate payday loans more, to make it harder for con artists and predatory companies to interfere with legitimate loans.

As for Davis, she doesn't know if she'll see her $280 again, but she wants others to learn from her mistake.

"And if I'm a registered nurse and I can be fooled, anybody can be fooled," she said.

A Charlotte-Mecklenburg Police Department financial crimes detective said even if you are dealing with a legitimate company to be careful with payday loans in general and especially their interest rates.

"These guys right here are charging astronomical interest rates. On a $500 loan, you could end up packing back thousands of dollars," said Detective Kevin Jones.

When looking for a payday loan online, the BBB recommends the following:

Consider all of your options. Payday loans can be extremely expensive if you are unable to pay the loan off quickly. The Federal Trade Commission recommends looking into a short term loan from your bank, contacting your current creditors quickly to explore payment options, working with a credit counseling center or at the very least, shopping around for the best interest rate and terms. Because of concerns with online lenders, try to find a brick and mortar location before settling on a lender.

Look for the red flags. Unscrupulous online lenders often wave the same red flags including not being forthcoming about their location or contact information. Also be cautious of any lender that doesn't ask you for any background information outside of your bank account number.

Research the lender with BBB. Always check an online payday lender's reliability report online before you hand over any bank account information. BBB Reliability Reports are available for free online and will tell you how many complaints BBB has received, how the company responded to complaints and BBB's overall letter-grade rating.