Payday Loan Recovery Firms ‘Scam’ Customers by Taking Nearly HALF of Repayments
HUNDREDS of struggling Britons lose nearly half of payday lenders’ repayments to “scam” recovery companies, according to a survey by The Sun.
Payback companies, which often advertise during the day on TV, charge up to 45 percent to help borrowers recover money for poorly sold payday loans.
While claim companies are legally allowed to do this, it means customers can lose up to £ 450 on a £ 1,000 claim, almost half of the amount owed.
Payday loan complaints increased by 130% in the 2018/19 fiscal year compared to the previous year, with the Financial Ombudsman Service receiving 39,715 new complaints compared to 17,256.
Just over half of these cases (53 percent) were confirmed by the Financial Ombudsman Service in favor of consumers.
But despite the city’s watchdog, the Financial Conduct Authority (FCA), capping the amount companies charge for PPI claims at 24%, there is no cap for other claims, such as payday loan repayments.
Experts criticized the companies for “scamming” their customers.
“Claims management companies just send a standard email, they don’t do anything fancy or offer one-on-one support to clients. It’s a scam,” said Sara Williams, debt counselor and founder of Debt Camel blog.
Martyn James, consumer rights expert at Resolver, the complaints handling tool, said: “Payday loan compensation is a reimbursement of massive fees and interest that has driven people in dire straits to to bring.
“To take a large sum of money for doing nothing is deplorable.”
Recovery companies say the fees are more expensive than PPI claims because they are more complex and the funds reimbursed are lower.
They say the average payment is £ 1,400 for payday loans, while MoneySavingExpert says the typical PPI pay is around £ 3,000.
How to request a refund from payday lenders
YOU can claim compensation from a payday lender if the loan was unaffordable, even if you have finished paying it off.
If you believe you are entitled to compensation, you should follow these DebtCamel steps to find out how to make a claim.
1. Check if you sold the loan incorrectly
Before a lender gives you a loan, they must check whether you are able to repay it.
For a payday loan to be affordable, you need to be able to pay it off the next month as well as pay off your other bills and debts.
The loan was unaffordable if:
- you often renewed loans or borrowed again soon after repaying a loan;
- your loans from a lender increased in volume;
- some reimbursements were late; Where
- the loan was a big part of your income.
Ask the lender for a copy of your loan details, such as when you took out it and how much interest you paid.
Compare it to your bank statements from the time you took it out and see if you could have paid off the loan after paying your bills.
2. Make a complaint
There are websites that will help you submit your complaint to the lender, but be aware that if you are successful, they will take part of your compensation.
DebtHacker.co.uk and Resolver are completely free tools that will help you in the same process.
If you prefer to do it yourself, you should write a letter or email citing “unaffordable loans” and request a full refund of the interest and fees you paid, plus the 8% interest on the loan. ombudsman in addition.
Also request that the loan be removed from your credit report.
You can find free letter templates on DebtCamel and MoneyAdviceService, although some lenders have their own recovery tools.
You can complain even if the lender has been the subject of administrative proceedings, but then you will need to submit the complaint to the administrator.
3. Contact the Mediator
If you haven’t heard from you after eight weeks, you must bring the matter to the financial mediator.
You should also contact them if your claim is rejected, if the repayment is too low, or if the company refuses to consider loans that are more than six years old and have been sold to a debt collector.
But be aware that you usually can’t complain to the ombudsman when the business has been foreclosed.
Borrowers are due for compensation on a payday loan if they were sold a loan that they could not afford to repay.
Whereas PPI (Payment Protection Insurance) was a product added to loans or credit cards to cover payments if customers got sick or were made redundant.
This has often been forced on clients or sold unsuitable policies to them, but the deadline for claiming the PPI ended yesterday.
The FCA told The Sun it plans to cap all other types of clawbacks.
Simon Evans of the Alliance Of Claims Companies, which represents three of the companies included in this survey (Ashley Howard, Allegiant Finance Services and The Central Claims Group), says clients have many options for recovering their payday loans.
He added: “They are going there with their eyes open with fees clearly displayed and maybe the finger of shame should be on the payday lenders who gave these unaffordable loans to begin with.”
Allegiant Finance Services, Blue Panda Finance, My Claim Solved, Redbridge Finance and Sanderson Drake all said they were clear about the fees charged to clients and that the complex nature of the claims makes them more expensive to process.
The Sun also contacted Ashley Howard, Fast Track Reclaim, Impakt Claims, Payday-Claim, PaydayLoansClaimback, Payday Refunds and PDRC, but they had not responded at the time of publication.
Earlier this year, we warned that thousands of payday loan customers were being “tricked” into full repayments after using claim companies with “misleading” ads.
But you can take it back. We spoke to a father of two who got £ 3,750 back on a £ 600 payday loan he couldn’t afford.
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