Are Online PayDay Loans Safe? | Attorney General - State of Colorado

Are Online PayDay Loans Safe?

Payday loan website

If you are in need of short-term cash, online payday loans may seem alluring with claims of getting cash fast, all from the comfort of your own home. Before you take the bait and apply for an online payday loan, keep in mind that these loans come with many risks and can end up being very expensive.

It is important to carefully consider all your options for obtaining short-term cash. Does your bank or credit union offer short-term loans? Would your employer consider giving you an advance on your next paycheck?

If you decide that an online payday loan is the best option, be aware that many online payday lenders are unlicensed. These unlicensed lenders are making illegal loans, which are often much more costly, as maximum allowable rates are exceeded and additional fees are not disclosed.


Avoid falling for an unlicensed payday lender by following these tips:

  • Don’t share your personal information without doing research on the company.
  • Even if you fill out the online form but do not hit submit, your information may have already been captured by using keystroke logging.
  • Some companies are actually lead-generators and not lenders, meaning your personal information may be sold to several third-parties lenders.
  • Check the website for a privacy policy. Does it disclose how your information will be shared or protected?

Protect your banking information:

  • Setting up automatic payments with an online payday lender may seem convenient, but you could be allowing an unlicensed company access to your bank account, making multiple unauthorized withdrawals.
  • Find out if the online payday lender has a physical location.
  • Lenders that do not disclose a physical location are often unlicensed and could even be operating outside of the country.
  • If the website does not have a “Contact Us” page, try searching the website’s privacy policy or terms & conditions, often found at the bottom of the homepage.

Read and understand the loan agreement:

  • Does the loan specify that Colorado law applies? A company must be licensed by the State of Colorado in order make loans to Colorado consumers.

Verify the payday lender is licensed to make payday loans in Colorado:

  • Searching the Licensed Supervised Lenders List, available here.  
  • In order to become a licensed payday lender in Colorado, the lender must provide specific information to determine if the company complies Colorado’s lending laws.
  • Licensed payday lenders must follow Colorado payday lending laws, which set allowable loan rates and fee limitations.

If you have become a victim of online payday lending or if you wish to report suspicious activity, please file a report here.