The consumer group, Which?, has exposed poor practice in the payday loans market, including potential breaches of the Consumer Credit Act, poor privacy provisions and inflated annual percentage rates (APRs).
Following a mystery shopping exercise, two lenders – Paydaykong. com and Swiftmoney. co.uk – were reported to the Office of Fair Trading. Which? alleged that Paydaykong.com was operating without a valid consumer credit licence, while Swiftmoney.co.uk failed to show the APR for its loans on its website.
Which? also reported CashEuroNet UK, which operates Quick-pay-day.co.uk and Quickquid. co.uk, to the Information Commissioner's Office (ICO) after its researcher received dozens of third party emails and phone calls following his application – despite the lender assuring Which? that it does not sell customers' details on. "Payday loans ... should be an absolute last resort," said the executive director of Which?, Richard Lloyd, left.
According to Which?, these providers typically charge £20-£35 for a short-term £100 loan. The most expensive was Wonga. com, which quoted £36.72 for a 30-day loan of £100 – equivalent to an APR of 4,394 per cent. The same amount borrowed through an authorised overdraft from the Co-operative Bank would cost just £1.35. "If you're struggling to get to payday then the first thing you should do is talk to your bank," Mr Lloyd added.