Pay day loan fraud

The biggest case of fraud comes with the idea of pay day loans and the way they are structured to begin with.

This is a very unpopular thing to say if you work in the lending industry, but pay day loans are designed to take as much money from the customer as they can, while ensuring that they can retain the customer by putting them into a cycle of taking pay day loans to survive towards the end of the cycle, and then either bankrupting the customer or pushing them out completely into debt if they believe they have nothing of value.

Pay day loan companies have operated with far too little regulations for the last 20 years, which has seen the rise in debts for many customers over the years. Many times, these customers are not the most financially stable or responsible, and almost like vultures these lenders can immediately spot the customers they know that will inevitably default on their loan.

What is worse, is that these cycles can last up to 20 pay day loans, which become a 2 year highly profitable loan rather than just 20 pay day loans. The customer can borrow a higher amount each time they pay their loan back, yet the interest rate largely remains the same month after month. So, the customer unknowingly spends so much more than they would have paying these lenders back than if they just took out a personal loan 3 or 4 successful repayments in.

Every time a pay day loan has been repaid, the customers credit rating goes up. Eventually, they have paid back so many pay day loans that their affordability now approves them for a personal loan, but it is too late for the customer to either get out of the pay day loan cycle, or they are completely unaware of how much their credit rating has improved.

For the customers who figure this out too late, we can help, but too many are unaware of the option to sue for their payment back.

Business loan customer fraud

One of the ways that lenders often commit fraud is against many business loan customers. If a customer has taken a business loan, one of the popular ways that lenders like to commit fraud against them is to target companies that have either a high inventory amount, or a high property asset inventory.

The easiest way to take as much from a customer who has taken a business loan as possible is to ensure that they default on their loan. If they default on their loan because the amount that they must repay is too high, then the customer will lose all inventory or properties that they loan is secured against. This way, a loan that is only worth £100,000 now becomes a loan that is worth close to a million depending on the amount of your inventory or property assets.

The biggest way that lenders commit fraud to make this instance happen is to borrow loans for a higher amount than they should have been borrowed for to begin with. If a company is only making £10,000 annually in profit, their business loan total should not be more than £2,000. There is supposed to be a scale of affordability that is already corrected for business loans, as it helps to stop a default in payment. But many banks and lenders ignore this if they believe that the company would default on their loan repayment, which is why they sometimes accept companies for loans that are high above their real affordability.

The next time you look for a business loan you should use a more trustworthy company such as businessloansoptions.co.uk as they are a comparison company rather than a lender. These comparison companies or referral companies usually calculate your total income to find out how affordable your loan really is, and then provides you with lenders that match. This way you can safely look for companies to take loans with and invest your borrowed amounts.

Interest rate fraud

One of the biggest cases of fraud that I had to fight against with a small pay day loan lender was the obvious fraud of interest rates that were offered versus what was signed against. The problem with a lot of these companies is that they offer weird clauses within the fine print that increases the interest rates of a loan based on occurrences, which is genuine fraud within the lending industry.

A lot of these companies add a higher interest rate clause into the loan when they can provide proof of late repayments, or they can find a reason for the customer to be less affordable. Usually, there must be circumstances for the lender to be able to calculate that the customer is less affordable than they were before the loan had been accepted.

One of the ways that they can make a customer less affordable is by increasing the rates once a company has made a late repayment. If a customer pays a month late, they can increase the rates as much as they want in the clause to claim that they believed due to the missed repayment, the customer is less affordable than they were when they first applied for a loan.

There are other ways that lenders also do this. For example, they will intentionally accept loans using finances they knew were partially laid due to freelance work or works that they know would not be continued multiple times. That way, they can borrow a higher amount for a lesser interest rate without telling the customer that the inconsistent payment was one of the reasons why they were so “affordable”. From there, they can either increase the interest rates or wait for the loan to eventually become too difficult for you to pay off yourself.

Again, we have fought many companies who have used these practices.

Late repayment fraud

1800 Lender Fraud is the go-to company to help talk you through any legal disputes or possible fraud that you may be experiencing with a loan lender currently. There are so many lenders and companies that are currently operating with a level of fraud that most customers are not aware that they are being scammed or placed under fraudulent terms and conditions. The issue with this fraud is how much it can affect you in the long term.

One such example was a personal loan customer who worked with one of the biggest banks in the United Kingdom. When you are working with such an established company, one of the last things that you would expect is a cause of fraud. But some lenders operate with a level of fraud that is hidden within the terms and conditions of the contract that is signed by the customer, and due to the amount of find print it can be so difficult to find.

The main issue with this company was their late repayment terms. They would only allow 3 days before they would follow up legally. Now, the issue is that customers were told they get a two-week window for late repayments before they are taken to a legal battle. When you give a customer three days, there is every chance they may not be aware they have not paid their loan. This is especially true if it is a direct debit that has simply failed to go through that day.

Many customers hide these secret terms into contracts, and we have taken this specific company to court multiple times for breaking this rule. It has become such a process that now customers are simply settled out of court within a few weeks of filing. It is sad that lenders practise this, but without competent lawyers against them they can.

1800 Lender Fraud

Alongside our sister website 1800sueyourlender, we are a company based around pointing out direct fraud made by lenders around the United Kingdom. There are so many lenders and banks that are practicing in outright fraudulent activities around the UK, and because of the regulations being slightly flexible towards some fraud, we felt we had to oust some of these companies for what they really are.

There are many ways to fraud customers without being obvious about it. One of these ways is to suggest that you are offering a lower interest rate than you really are. While we will get into the many ways that companies have operated in fraudulent activities throughout the years, one of the strangest and possibly worst ways I have seen is outright lying about the interest rates offered. But this really deserves its own blog post.

Another way some lenders get away with fraud is by changing the amount that the loan was
accepted for. As strange as this sounds, some companies do in fact offer an amount, but a part of that amount is considered an “immediate repayment portion”. Again, this deserves its own post one day, especially considering how horrible of a practice it really is.

Sometimes, there are cases of fraud that are a lot less harmful. I have seen some companies offer loans, but they are in fact a shell company for another lender. While this isn’t as harmful because the rates, amounts and so on doesn’t change, it is strange that some lenders will pretend to be other companies which are sometimes smaller. There are strange reasons that they do this too.

Fraud is a prevalent thing within the loans industry. Loans are essentially one step away with being illegal in the United Kingdom, but within the small space that they do have to operate, some companies can’t help but be greedy as they want to fill quotas immediately.