Anyone who has taken out a loan of some sort has probably been asked to provide two or three references on the credit application. Payday loan lenders are one of the many creditors who will ask an applicant to do this.
This information isn’t collected so the lender can call the applicant’s references to ask if they are a good candidate for a loan. No, it’s not the same as an employer who may call a friend or family member to make sure the potential employee is responsible and a good fit for the job. In fact, it’s the opposite.
Payday loan lenders, along with many other credit issuers, gather this information for the purpose of having someone to call when the borrower defaults on their loan payments. So what happens when you are not the borrower, but the reference?
Payday loan lenders and all other debt collectors are bound by the Fair Debt Collection Practices Act which governs what they can and can’t do in an effort to collect a debt. The law states that although they can call you as a reference, they are not allowed to disclose the fact that your friend or family member is past due on a loan or credit card account. The collector will call you if the person who listed you has moved and they are looking for a current address. They will also call you if the debtor has had a change of employment or their debt collection notices have been returned.
So what recourse do you have when the phone starts ringing off the hook and you are not responsible for someone else’s debt? Assuming you are not a co-signer, you do have options to get the phone calls stopped and the collector off your back.