Paydayrefunds.co.uk is planning to take action against U.S. based payday loan giants Curo, Lending Stream, and QuickQuid which targeted British customers charging them up to 2000% APR. The U.S. lenders have been accused of exploiting vulnerable Britons in a scandal that could be bigger than PPI. Paydayrefunds.co.uk is set to apply for injunction suggesting these firms may be forced to pay millions in compensation.
The payday lenders are accused of mis-selling loans to approximately one million Britons. Paydayrefunds.co.uk are in the process of preparing legal action after the lenders refused to offer information on customers who could be due millions in compensation.
Paydayrefunds.co.uk issued a letter of action in February 2018. The letter has already run out (as of 24th August 2018). The company has appointed a barrister as part of the preparations to issue an injunction against the lenders at London’s High Court.
Payday loan lending schemes were loosely regulated five years ago. After 2014, the FCA demanded that firms address issues surrounding borrowers who had been plunged into further debt by payday loans.
The FCA directives were followed by a cap imposed on charges. However, according to paydayrefunds.co.uk Director; Vincent Veron, most lenders are accused of carrying out shallow credit checks, preying on vulnerable borrowers and charging high interest. Paydayrefunds has 32,000+ customer complaints which must be investigated. The claims could easily amount to millions of pounds in compensation.
Curo is a U.S. lending firm which operates in the UK as Wage Day Advance. The firm was listed in the U.S. stock market recently for $670 million, yet Veron claims the lender among other companies have been uncooperative when it comes to investigating customer compensation claims.
While speaking to MailOnline, Mr. Veron stated that Curo, Lending Stream and QuickQuid have been preying on vulnerable British consumers for years using inappropriate lending practices. After the FCA ruled that many loans were mis-sold and needed reimbursement, the same lenders are unwilling to cooperate in activities that may lead to refunds.
According to Veron, the current scandal is bigger than PPI given it affects UK’s most vulnerable consumers directly. The lenders in question are accused of targeting desperate borrowers with 2,000% APR loans without conducting appropriate credit checks to ascertain affordability. Given the possibility of being hit by a huge claims repayment bill, the lenders have begun abandoning former borrowers coldly ignoring their legal right to compensation.
Paydayrefunds has already written to Curo, Lending Stream and QuickQuid warning them of legal action as the company seeks fair treatment for its clients. According to paydayrefunds.co.uk, the lenders may have flouted regulatory requirements and obligations, but there is hope that the justice system will make them take responsibility for their actions.
According to paydayrefunds.co.uk Operations Manager, Andy Gannon, the average loan amount borrowed is £1,100 although the figures could be higher because of a high APR. In the worst cases, borrowers had taken an average of 60 loans at exorbitant interest rates.
The new regulations require lenders to refund the entire sum of the loan back for mis-sold loans in the past. The compensation includes interest and associated fees. Lenders must also pay 8% interest above that figure. Claims must be investigated within two months (eight weeks).
While speaking to MailOnline, Mr. Gannon stated that many payday loan lenders were guilty of trapping vulnerable people in endless debt cycles. The lenders in question were guilty of texting customers who hadn’t repaid their loans asking them if they wanted another loan to repay their existing loan/s. A simple “yes” reply to such a text would see customers secure another loan in minutes.
Gannon argues that payday loan lenders who have engaged in such practices in the past must take full responsibility now. Implications
There has been a massive push for payday loan regulations to extend to other financial products. If paydayrefunds.co.uk is successful in making Curo, Lending Stream and QuickQuid pay millions in compensation for mis-selling payday loans in the past, the developments could see a renewed push to make regulators extend regulation to traditional financial products and issuing institutions like banks. This may see an end to unfair charges on overdrafts, credit card loans among other loan products notorious for exploiting borrowers. Some past wrongs involving traditional loan products may also be rewritten.