Criminals use many tactics to fund their illegal enterprises. Usually, criminals target businesses, enterprises and people they feel are easy targets. That moniker has been applied to the payday loans industry. As cash advances become more and more popular, the industry has to on alert more and more to stave off criminals seeking to use the industry for personal gain.

Payday loans companies must often times defend themselves from the negative labels placed on them by critics. Sometimes, the threat of a rip-off doesn’t come from the loan companies, but so-called customers with the sole intent of making money. The most common criminal acts that loan companies must deal with is money laundering.

Money laundering sounds like exactly what it is, the process of making money ‘clean’. Many criminals have the problem of not being able to account for the origins of their money. They get around this issue by fraudulently obtaining cash advances, money orders and wire transfer to hide the origins of their money. Most reputable industries require customers to go through multiple background screening checks to verify their identities. But sometimes criminals use legitimate customers in order to filter there money through the system.

In addition to criminal money launderers, people sometimes involve payday loan companies in check fraud schemes. Since payday loan companies offer a myriad of services, criminals often use all of those services to get the money they need. Check fraud is another common occurrence in the industry. When a customer rights a check to a payday loan company, usually for the loan amount plus a fee, they let the lender hold the check until the next payday. Some customers use bad checks to request these loans and have no intention of paying the funds back. This practice costs payday loan companies lots of money. The usually recoup lost funds because like banks, most lenders are insured by companies like the FDIC.

Aside from domestic criminal enterprises that payday loans companies can anticipate, there is another criminal enterprise that uses the lending industry for its gain-terrorism. Money wires are being used and have been known to be a central method of transferring funds amongst terrorists worldwide. Usually, payday loan companies that offer money transfers don’t know the person sending or receiving money. This anonymity fuels a lot of terrorist activity that could not only affect the payday loan industry but people all over the world.

Many companies are fighting back against the exploitation that they face from criminals. Some payday loan companies have improved their technology and are able to thwart check fraud by scanning a check a verifying it in minutes. Other innovations that have been made include better training of employees to detect criminal behavior, requiring fingerprints to be taken and stored as well as requiring a social security number in some cases, to acquire funds. Criminals may still be creating ways to scam the payday loan industry, and the industry, in turn, must stay focused on maintaining safe, secure lending institutions.