Wonga attacked for customer letters

 

Payday lender Wonga.com has been criticised by the trading watchdog for using aggressive and misleading debt collection methods.

Wonga suggested in letters and emails without appropriate justification that some customers may have committed fraud, the Office of Fair Trading (OFT) said.

Several hundred letters went out to customers who had asked their card providers to reverse a payment made to Wonga and to those who had entered into debt management plans, the OFT said.

The watchdog said the high-profile lender told customers it would consider contacting police if they did not do as Wonga asked in the letters, which were sent out more than 18 months ago.

The OFT has imposed a requirement on Wonga under the Consumer Credit Act, saying that it must not allege that customers have or may have engaged in criminal conduct, without the necessary justification.

The watchdog also said Wonga must not tell customers they should not be in debt because of the job they hold or for any other reason, after finding a Wonga call script stating that customers who work in the public or financial sectors should not go into debt.

The measures mean that if it behaves in this way again, Wonga would face fines of up to £50,000 and its consumer credit licence could be affected.

Wonga said it plans to appeal against the OFT's decision. It said the letters were sent on "isolated" occasions and it has already put a stop to such activities.

It admitted the tone of the letters "fell below our usual high standards" but said in a statement: "Wonga has put in place procedures to ensure these communications cannot be repeated and it has provided assurances to the OFT to that effect.

"In particular, current fraud processes ensure cases of suspected fraud are always referred to an in-house team of experienced professionals and suspicions that a customer may have acted fraudulently are not communicated to the customer."

It said the call script highlighted by the OFT had not been used since January 2010.

The statement continued: "In these circumstances, it is unnecessary to impose a requirement on Wonga to no longer use the communications or the script. Wonga has already demonstrated these were isolated incidents."

David Fisher, OFT director of consumer credit, said: "We have acted to ensure that Wonga does not behave this way again. I would like to make it clear to businesses that they must not adopt aggressive or misleading practices with their customers."

Wonga.com recently sparked controversy by launching a service offering loans to small businesses, saying it could help those companies waiting for longer-term funding or if big invoices have been paid late.

Shadow business secretary Chuka Umunna told the Daily Mail it was "deeply worrying" that firms would need to turn to Wonga for help.

The OFT launched an extensive review of the payday lending sector generally in February, amid concerns that vulnerable customers are being given loans without the proper checks being carried out and that too many loans are being rolled over. It is due to give its findings and strategy to raise standards later this year.

The sector has exploded in size in recent years, with new players arriving from the United States. Consumer Focus figures indicate that the payday loans market increased from 300,000 borrowers in 2006 to 1.9 million in 2010.

Payday lenders have argued that they offer a much-needed service to customers and their high interest charges are often more transparent than those of mainstream banks.

PA

Sport
footballLIVE City face Stoke, while Warnock returns to Palace dugout
Arts and Entertainment
The Doctor and the Dalek meet
tvReview: Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Arts and Entertainment
books
Life and Style
3D printed bump keys can access almost any lock
gadgets + techSoftware needs photo of lock and not much more
PROMOTED VIDEO
News
i100
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
News
i100
News
The slice of Prince Charles and Princess Diana's wedding cake and the original box from 29 July 1981
newsPiece of Charles and Diana's wedding cake sold at auction in US
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

DevOps Engineer (Systems Administration, Linux, Shell, Bash)

£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

Financial Technical Consultant (C++, C#, Finance, MSc, PhD)

£50000 per annum: Harrington Starr: Financial Technical Consultant (C++, C#, F...

Day In a Page

Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference