From the BBC
Payday lender Wonga must pay £2.6m in compensation after sending letters from non-existent law firms to customers in arrears.
The letters threatened legal action, but the law firms were false. In some cases Wonga added fees for these letters to customers' accounts.
The City watchdog, the Financial Conduct Authority (FCA), said 45,000 customers would be compensated.
An investigation found that Wonga sent letters to customers from fake law firms called "Chainey, D'Amato & Shannon" and "Barker and Lowe Legal Recoveries".
The plan was to make customers in arrears believe that their outstanding debt had been passed to a law firm, with legal action threatened if the debt was not paid.
The company was using this tactic to maximise collections by piling the pressure on customers, the regulator said.
"Wonga's misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears," said Clive Adamson, director of supervision at the FCA.
Other than the fact that they didn't notify a genuine legal firm to do the job and did it themselves using a fake name, is anyone saying there's anything of material difference to what would have happened if they'd handed them to a real firm of solicitors?
Companies with overdue debts hand things to solicitors. They threaten legal action if a debt isn't paid, and I'm pretty sure that you can add on fees for the debt collection. In which case, who lost out except for the lawyers?
Wednesday, 25 June 2014
From the BBC
My latest blogpost: A Question about this Wonga StoryTweet this! Posted by The Stigler at 19:41