25 Texts and Emails a Day: How Payday Loan Companies Track Vulnerable Borrowers | Payday loans

ALex Jones* has to turn off his phone at work so the constant texting doesn’t distract him. He gets around 20-25 a day from payday lenders and brokers offering high cost loans of up to £1,000 at a time.

“Need money ? We have reviewed your application…” reads a typical text. “A loan of up to £900 is ready to complete,” says another. “We have received your loan request. Are you able to answer our call? Answer YES…”.

His inbox is equally full, with spam from brokers and lenders arriving every five minutes at certain times of the day. The same lender can send messages at 10:59 and 12:39, while two for the same broker arrive one after the other. Accepting any of these credit offers wouldn’t be cheap – all companies offer high cost short-term borrowing, often at annual rates in excess of 1000%.

Jones, who is in his 40s and has a wife and young son, is candid that he opened the door to these lenders. Addicted to gambling, he took out short-term loans for a few years, his debts piling up until he became insolvent at the end of 2014. Recent money troubles led him to seek loans this summer, and the floodgates opened.

“Once you get the feelers out, like a lot of people do, they start showing their true colors,” he says. “There are companies that have taken a lot of flak but even with this negative press and extra regulation they are still happy to bomb and harass and even lend to someone who is used to not being able to. repay it and who is in the event of insolvency.

He says he feels like a drug addict who is constantly being offered temptations. “Addiction is a very complex and difficult thing,” he says. “You have bumps in the road, and when you have those bumps, the last thing you need is temptation. My life would be infinitely easier if my drug of choice weren’t so readily available. If it weren’t for my face, that would be less of a problem.

Jones may have fallen victim to what is known as a “ping tree”, in which a request is made through a particular type of site which is not itself a lender but a “lead generator”. . It forwards (or “pings”) your request to many other companies. Although the rules around payday loans have been tightened, it seems some lenders and brokers are still playing fast and loose with people’s contact information.

This isn’t the first time Jones has fallen into this trap. Several years ago he was also inundated with messages from lenders and brokers, but since then the industry has come under a new regulator, and Jones thought things had changed. Also, his credit record is worse. In late 2014, he and his partner entered into an IVA, an insolvency agreement that allows borrowers to negotiate partial repayment of their debts over a set period of time. At the time the couple could manage to pay £380 a month into the IVA after bills and travel costs to work, but this summer the rented house they had lived in for eight years was put on hold in the market and they found that their monthly fees were lower than the market rate. Their new home, in a less desirable part of town, is costing them £1,200 a month, compared to the £800 they were paying, and as a result they are behind on the IVA.

Despite the IVA, Jones was able to take out new loans from two lenders, neither of whom asked him to disclose previous money problems. His terrible credit history did not prove an obstacle.

Over the summer, Citizens Advice said some payday lenders were still flouting FCA guidelines on responsible lending, with around a quarter of borrowers saying they hadn’t been asked or didn’t recall being asked about their situation. She cites the example of a client who was granted a personal loan following verifications while suffering from depression and alcoholism, had no permanent address, had previously been declared bankrupt and had only benefit income.

For Jones, the emails and text messages are pouring in, even as the lenders he is now in arrears with come into contact to demand payments; the IVA company is also suing him. He’s considered changing his phone number, but for now he’s just turning it off. He says he doesn’t think unsubscribing will make a difference.

Meanwhile, the FCA reaffirms that under existing rules lenders are not allowed to send emails telling people they have been approved for a loan. “Our rules require companies not to tell or imply to customers that credit is available regardless of the customer’s financial situation or status. We also require that all communications be clear, fair and not misleading. If a financial promotion is misleading, it may violate our rules.

Jones says he wants people to know that lenders and brokers are still aggressively targeting borrowers, despite the new rules. “If you fill in your details, they don’t just go to one company – they go back to all the sharks in the pool.”

* Alex Jones is not his real name

Charity calls for ban

Debt charity StepChange called on the city watchdog to ban unsolicited calls for ‘high-risk financial products’ such as payday loans.

“Companies are approaching financially vulnerable people with offers of loans that can cause serious financial harm,” says Peter Tutton, the charity’s policy manager. “The problem for many people is that they have lost control of their personal data and don’t know which organizations use or will use their information – and this can sometimes lead to bombardments.”

In a report on Wednesday, the charity said nearly two years after tough regulations were introduced, the payday loan market “continues to show signs of irresponsible lending and poor treatment of people in financial difficulty. “. He said inappropriate lending was still happening, people were still accumulating multiple loans, and accessibility checks by lenders were still not effective.

In the first six months of the year, StepChange helped 28,000 people with payday loan debt, with more than a third (37%) having at least three such debts. The average amount owed was £1,380, just £17 less than in 2014 before the regulations came into force. However, the proportion of people coming to the charity with payday loan debt has fallen from its pre-regulation peak of 23% to 16% this year.

A number of additional rules came into effect in January 2015, including a requirement that interest and fees on all high-cost short-term loans be capped at 0.8% per day of the amount borrowed. If borrowers fail to repay their loans on time, default charges should not exceed £15. In addition, the total cost (fees, interest, etc.) is capped at 100% of the initial sum, which means that no borrower will ever repay more than double what they borrowed.

Tutton added that the government’s Digital Economy Bill, currently going through parliament, was an opportunity to tighten rules around companies selling and sharing personal data.

If you’re struggling with debt, there are plenty of places you can turn to for free advice. They understand:

StepChange Debt Charity Stepchange.org or call 0800 138 1111

Advice to citizens Find your local office at citizensadvice.org.uk

National debt line Nationaldebtline.org or call 0808 808 4000

Payment Plan A service funded by the credit industry PayPal.com or call 0800 280 2816

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