Avoiding Scams and Predatory Lending

Freshman Year · Wealth · Required Lesson

Avoiding Scams & Predatory Lending

25–30 minutes Medium Required

Destination

By the end of this conversation, the mentee should be able to recognize common scam red flags, explain why predatory loans are dangerous and name one trusted person they can ask before making a risky money decision.

Stop 1 of 4

Talk

Goal: Find out what the mentee has already encountered online or heard about, without making them feel foolish for almost falling for something.

“Scammers aren’t successful because their targets are careless. They’re successful because they’re good at creating pressure, urgency and trust—on purpose.”

Choose three to five questions

1. Has anyone ever messaged you online promising free money, a prize or a gift card? What happened?
2. Have you ever signed up for something “free” that turned out to cost money later?
3. Do you know anyone—friend, family member—who has been scammed? What happened, if you’re comfortable sharing?
4. If you needed cash fast and saw an ad for an instant loan with “no credit check,” what would you think?
5. Who would you go to first if you thought you were being scammed?
Mentor Tip: Almost everyone has almost fallen for something. Sharing a real example of your own, if you have one, can make this conversation feel less like a warning and more like a shared reality.

Stop 2 of 4

Learn

What makes something a scam?

A scam is a deliberate attempt to trick someone into giving up money, personal information or account access. Scams often rely on urgency, secrecy and pressure—”act now,” “don’t tell anyone,” “this offer expires in 10 minutes.”

Route 21 Big Idea:
If something creates pressure to act immediately, or asks you to keep it secret from people who care about you, that pressure is the red flag—not a reason to hurry.

Common types teens run into

Giveaway & prize scams“You won!” messages that ask you to pay a fee or “verify” your identity before you can claim anything real.
Subscription trapsA “free” trial, ringtone or filter that quietly starts charging a recurring fee, often buried in fine print.
PhishingFake texts or emails pretending to be your bank, school or a delivery service, asking you to “confirm” personal information.
Social & gaming scamsOffers of free game currency, followers or “collabs” that lead to fake websites asking for logins or payment info.

What is predatory lending?

Predatory lending means offering loans designed to trap the borrower in debt—not to help them get back on their feet. A classic example is a payday loan: a small, short-term loan due on your next payday, usually with extremely high fees.

Example: A $300 Payday Loan
Amount borrowed$300
Typical fee (2 weeks)$45–$60
Equivalent annual rateOften 300–400%+ APR

Compare that to a typical credit card, which might charge somewhere around 20–30% APR. Payday loans are usually many times more expensive—and if the borrower can’t repay on time, fees can pile up fast, trapping them in a cycle of borrowing just to cover the last loan.

Red flags to watch for

Common Warning Signs
⚠️Pressure to act immediately or “before it’s too late”
⚠️Requests to keep something secret from parents, mentors or trusted adults
⚠️Asking for gift cards, crypto or wire transfers as payment
⚠️“No credit check” loans with unclear or sky-high fees
⚠️Offers that sound too good to be true—because they usually are

Stop 3 of 4

Try

Spot the red flag

Read each scenario together and identify what feels off about it.

Scenario 1A message says you’ve won a $500 gift card, but you need to pay a small “processing fee” first to claim it.
Scenario 2An ad offers a loan with “no credit check, cash in 10 minutes,” but doesn’t clearly show the interest rate or total cost.
Scenario 3Someone online offers to double any money you send them within 24 hours—but asks you not to tell anyone about the “opportunity.”
Scenario 4A text claims to be from your bank, saying your account is locked, and asks you to click a link and enter your password to unlock it.
Which scenario would be easiest for you personally to fall for? Why?

Choose Your Route

Pick the video that best fits your time and interest today. You only need to watch one.

Level 1 · Quick Stop

How to Spot a Scam

Approximately 3–5 minutes

A short overview of common scam warning signs and why reporting scams matters, not just avoiding them.

Watch the Quick Stop
Talk afterward: What is one warning sign from the video you hadn’t thought about before?

Level 2 · Scenic Route

Predatory Lending (Khan Academy)

Approximately 8–10 minutes

A clear explanation of how predatory lending works and why it targets people who feel like they have no other choice.

Take the Scenic Route
Talk afterward: Why do you think predatory lenders specifically target people in urgent need of cash?

Level 3 · Open Road

The Highs and Lows of Payday Loans

Approximately 27 minutes

A panel discussion digging into how payday lending works, who it affects most and the debate around regulating it. Best watched in sections or across more than one meeting.

Explore the Open Road
Talk afterward: Did anything in the discussion change how you think about who ends up using payday loans, and why?
Mentor Reminder: Let the mentee choose the route whenever possible. The Open Road video is optional and can be split across more than one meeting.

Stop 4 of 4

Grow

Reflection

What is one red flag you’ll remember from today?
Why do scams and predatory loans often target people who are stressed or in a hurry?
Who is one trusted person you could go to if something felt off with money or a loan?
What questions do you still have about scams or loans?

A simple pause rule

Before sending money, sharing personal information, or signing up for anything urgent, pause and ask:

  • Is someone pressuring me to act right now?
  • Am I being asked to keep this secret from someone who cares about me?
  • Could I check this with a trusted adult before deciding?

How can your mentor help?

How can Route 21 help?

Would it help to have a list of safe places to ask questions before making a money decision, like a credit union or trusted financial counselor?
Mentor Wrap-Up:
Did the mentee leave with concrete red flags they can recognize, not just a vague sense of caution? Did they name a real person they’d go to for help? Did you avoid making them feel embarrassed about anything they’ve already experienced?