There are potential breaches of the Consumer Credit Act, poor privacy provisions and inflated APRs within the payday loans industry, according to Which? Money.
The consumer organisation conducted an investigation into the payday market, resulting in Which? reporting both Paydaykong.com and Swiftmoney.co.uk to the Office of Fair Trading. According to the organisation, the first company appeared to be operating without a consumer credit licence whilst the second failed to clearly show the APR for the loans offered.
Which? uncovered numerous examples of poor practice, including firms encouraging consumers to borrow more than they needed to and to rollover existing loans for several months. Furthermore, several firms were discovered to have lax website security – one firm even asked their customers to enter their bank details through an unsecured web page.
With the payday loan industry increasing in popularity – £1.9 billion worth of payday loans were taken out in 2010 – the organisation’s findings suggest a need for more stringent regulations.
Which? executive director Richard Lloyd said: “Payday loans might seem like a good solution for people whose money won’t stretch to the end of the month, but they should be treated as an absolute last resort. They can be an incredibly expensive way to borrow and we’ve uncovered a long list of poor practice by lenders.
“With increasingly squeezed household budgets, more people are taking out payday loans – so it’s vital that regulators keep a close eye on providers and deal firmly with any lenders breaking the rules.”
If you have Payday Loans that are overstretching your budget and need to seek advice on what can be done, contact Humber Debt Solutions on 0800 915 5371.