Short Term Loans Wonga in Hot Water Lender

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Short-term loan lender Wonga recently found itself in hot water over unethical practices regarding the collection of debts owed to the business.

By creating fake debt collector and attorney letters and sending them to people with outstanding debts, the payday lender was illegally pressure their customers to pay. It sparked some controversy as the Financial Conduct Authority (FCA) decided to fine the company £2.8million for its “unfair and misleading” conduct.

Since 2007, Wonga has been one of the leaders in the short-term loan market with a presence in the UK, Canada, South Africa and Poland, offering short-term, high-cost finance. Over the past 7 years Wonga has grown developing mobile apps for quick and easy loans, even sponsoring a number of sports teams including Blackpool FC alongside our very own Newcastle United. This drew criticism from a number of groups, including the Church of England.

Church of England-linked Wonga payday lender

More than 45,000 people across the UK have received debt collection letters from the short-term loan lender‘s fictitious law firms with company names created from the names of former and current staff members . A problem with this sanction is that it only applies from April 2014 due to the FCA taking over from the now obsolete Office of Fair Trading (OFT). This means that any transgression before this point by the short-term lender cannot be taken into account.

This isn’t the first time Wonga has found itself in hot water over its debt collection practices, with the OTF launching investigations into the company as early as 2011. It’s a long series of problems faced by the short-term loan lender which the company’s founder, Errol Damelin, left as company director just seven months after stepping down as chief executive.

Short-term lenders have been heavily criticized by many groups for their misleading promotions and exuberant APR charges on their loans. While many use their services with moderation and consideration, a number of people have fallen victim to the negative lending cycle and found themselves trapped in a downward spiral of debt.

By mid-July, Wonga customers are expected to receive their compensation for the payday lender’s atrocious practices.

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