Payday loans are illegal in some states.You knew payday loans were scams, but it’s even worse than you think. If you live in a state like New York, Virginia or Pennsylvania, payday loans are banned in your area — but that isn’t stopping predatory lenders from trying to rip you off, anyway.

In an interview with America Now, Virginia responsible-lending advocate Dana Wiggins said that companies are aware of the laws, but simply don’t comply.

“They know that it is illegal; many lawyers that work with us have had conversations with them and let them know that it is not legal in our state,” said Wiggins.

In at least one state, the government is fighting back. New York Attorney General Eric Schneiderman announced in September that five payday loan companies — some charging as much as 1,095-percent interest — would pay $300,000 in penalties and restitution, with some of the money going to the state and the rest to payday loan victims. If you live in New York and have taken out a payday loan, it may be worth checking out.

Do You Need to Repay Your Payday Loan?

No matter what the contract may say, anyone who’s taken out a payday loan in a state that has barred them is not obligated to pay it back. Thus, some crafty borrowers take out loans with the intention to never repay them, according to America Now.

But while the lender has no legal grounds to collect, they get detailed information about you, like your bank account and Social Security numbers, when you apply for the loan. Take the no-pay route, and you may need to change bank accounts to avoid automatic withdrawals. You can also expect a barrage of phone calls and letters from collectors.

And just because payday loans are illegal in your state now doesn’t mean they always will be. Predatory lenders are pushing back against payday loan laws, and even some politicians in Pennsylvania are fighting regulation.

If the rent was due yesterday and your checking account is in the red, a payday loan can seem very tempting. But it’s probably better to pay your landlord the late fee than to fork hundreds of dollars over to predatory lenders. I’d stay away from these shady deals

Image: taberandrew