Identity thieves use payday loans to make a quick buck, authorities say

From the Chicago Tribune (7/21/09)
By Jeff Coen, Tribune reporter

The first clue that Karen Milligan had been victimized by identity theft came with a call from a company that offers fast payday loans over the Internet.

“I said, ‘No, I didn’t apply for any loan. That doesn’t make sense,’ ” said Milligan, who recalled flashing from bewilderment to alarm as she tried to figure out what was going on.

A contract worker hired by Milligan’s employer had stolen hundreds of co-workers’ Social Security numbers and other personal data while on the job and used the information to take out quick $1,000 loans online in dozens of the employees’ names, officials said.

Investigators said the case highlights how few safeguards exist with payday loans and how easily identity thieves can use the companies to make a quick buck and stay undetected — at least until the bills come due.

Casandra Walls of Chicago, who was a temporary employee at AT&T, got the loans by submitting bogus applications online, officials said. She then cut and pasted the stolen information onto pay stubs and driver’s licenses if she was asked for documents, they said.

The loan company “didn’t even send me anything in the mail. She had just created an e-mail account,” Milligan said. “I was totally unaware.”

Walls, who was indicted this month on charges of wire fraud and identity theft, stole personal information on 2,100 AT&T employees, racking up $70,000 in loans, authorities said.

Like Milligan, many others were unaware they had been victimized, authorities said. In some cases, collection companies began contacting them about short-term loans with interest rates of 400 percent, authorities said. Credit ratings for many were damaged.

Investigators said most of the loans were taken out through a Texas company called PayDay One, which advertises that applicants need only an e-mail address, an active checking account and a job to obtain up to $1,000 “as soon as tomorrow,” its Web site says.

Walls allegedly took out one loan in Milligan’s name at PayDay One and a second with QuickClick, which called Milligan after it began flagging loans to AT&T employees because of so many irregularities.

“As soon as the payday loan was made to the account, she would just pull it out right away in two $500 ATM withdrawals,” said Mike Carroll a U.S. postal inspector in Chicago who investigated the case and advises consumers to check their credit ratings at least once a year for unusual activity.

PayDay One did not return a phone call seeking comment. An AT&T spokeswoman said the company notified all its employees whose information was stolen.

Carroll said he hopes such frauds make clear the need for more restrictions on online payday loans. Some banks also need to tighten their rules, he said. Some allow checking accounts to be opened online without running credit checks or verifying addresses, he said.

Milligan said she corrected her credit rating with the help of the Illinois attorney general’s office, but she fears her Social Security number and other personal information may be still out there, being used in ways she can’t control.

“That’s one thing I have learned is that this just festers,” she said.


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