The U.K. continues to struggle with payday loan lenders using fraudulent practices with customers. Just last week, a company from the U.K. was find over half a million pounds after they were found to have left themselves vulnerable to fraud. This payday lender has its credit license revoked for using unfair lending practices.
Failing to conduct appropriate identity checks which led to fraudsters targeting the company, these fraudulent applicants used more than 7000 other individuals' information and successfully received payday loans from them. The U.K. does have regulations to prevent this sort of practice, but this particular company did not follow the guidelines properly. These regulations were put in place not only to prevent fraud, but also to keep money laundering and terrorist financing out of the payday loan lender industry.
In addition to findings above, the same company was found to lack knowledge and skills needed to run a consumer credit business.
Payday loan lenders need to be professional and use best practices with all customers. Regulations are in place in the U.K. just as some of the U.S. states have their own trying to protect the customers from fraudulent lending practices. The lawsuits in both countries send a strong message to other payday loan lending companies that these regulations must be in place. There are some fraudulent companies who have created a bad reputation for those who do follow all regulations and use best practices. Transactions between a lender and customer should be done professionally and honestly in order to protect all involved.
Just as there are fraudulent companies who prey on the financially vulnerable, there are borrowers who take out these loans with no intention of paying it back or provide false information. Lenders need to be very careful approving applications. Thorough checks should be a normal part of any loan approval. This will not only protect a company from lending to a fraudulent applicant, but will also protect unsuspecting individuals from identity theft as in the mentioned case in the U.K.
There are too many people who apply for money from these short-term loan lenders who end up falling further in debt. There is room for additional regulations in order to include more of these customers. To counter balance this regulations, there needs to be some consumer regulation as well which makes them more accountable for their actions. Someone who takes out the loan and knows that there will be no money to pay off the loan come payday then claims that the lender was preying on them is not right either.
There are low cost payday loan lenders out there looking to help those good people in a bad financial situation, just as there are debtors serious about paying off their debt on time. An online payday loan is one option for stressful money times. When you know that your next paycheck is too far away to cover the impending bills, apply for the loan and carry through with the payoff. These low cost payday loans end up being a much more efficient solution to keep added problems at bay.