Are payday lenders who they say they are?

Posted in News About Loans For People With Bad Credit

With the number of people who seem to have a story about payday lenders increasing payday loans companies are seeking a defence.

 

For the first time in history one pay day lender has given access to one of their branches on a busy high street to clear their name, they have given access to journalists who can scrutinise the way the branch is run. The branch in question lends with a typical APR of 3000%, not uncommon in the payday loan industry.

 

When signing up for a payday loan the company requests your bank details to set up a continuous payment authority, similarly used in gyms and by utility companies. Unlike a direct debit this type of payment cannot be cancelled by you but only by the company. The company can then reinstate collections without any notification. A new law passed in 2009 stating that you can cancel payments by informing the bank, therefore if any money is removed from the account the bank is liable for reimbursement and refund; however this law has not always been applied. With banks arguing that they are not responsible for the payday lender, there is little that can be done to negotiate who is actually responsible if funds are removed.

 

£2b has been taken from payday lenders bank accounts in the last 4 years, however it is unknown whether or not this was taken wrongly or to actually pay off the borrowed money, with payday lenders stating that CPA contributes to 80% of their profits. A recent analysis of 665 cases by the Citizen’s Advice Bureau has found that 90% have grounds for complaint because of unfair treatment.

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