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Low payday loans tactics: scandal of ‘lost’ customers' cheques


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Payday lenders regularly ‘lose’ cheques sent by customers to settle debts, forcing borrowers to pay even higher interest bills, Financial Mail has learnt.

 

The tactic used by a number of payday loan firms aims to maximise profits by effectively locking in hard-pressed borrowers for extended periods.

 

The ploy will heighten concerns over the sector, which entices desperate customers into taking loans with interest rates as high as 4,000 per cent.

 

Paul Lynam, chief executive of Secure Trust Bank, whose Everyday Loans subsidiary frequently deals with customers seeking to consolidate loans to settle payday borrowings, said: ‘We will normally forward direct to the payday lender a cheque in settlement.

 

‘One thing that we find very surprising is the ability of some of these payday loan companies to regularly lose this settlement cheque, which has the effect of delaying settlement of the debt and incurring more very high interest rates for the trapped borrower.’

 

His company is frequently forced to send settlement cheques by recorded delivery before the payday loan firm will cancel the outstanding debt.

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  • 2 weeks later...

It could be partly because the Royal Mail are hopeless?

 

I run my own online business, and between 20% and 40% of items go missing every single week - whether items sent to me, or sent by me. I get proof of postings for them all, but it doesn't stop the massive percentage of items disappearing without a trace. It is something that is often complained about on online sites like Ebay in their forums. If you use the Royal Mail, then a lot of your stuff is, unfortunately, going to disappear into a big, black hole and never be seen again.

 

Of course, it could be that yes, the payday loans companies are on the fiddle, pretending they haven't had payments when they have, because none of us would put it past them.

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Payday lenders regularly ‘lose’ cheques sent by customers to settle debts, forcing borrowers to pay even higher interest bills, Financial Mail has learnt.

 

The tactic used by a number of payday loan firms aims to maximise profits by effectively locking in hard-pressed borrowers for extended periods.

 

The ploy will heighten concerns over the sector, which entices desperate customers into taking loans with interest rates as high as 4,000 per cent.

 

Paul Lynam, chief executive of Secure Trust Bank, whose Everyday Loans subsidiary frequently deals with customers seeking to consolidate loans to settle payday borrowings, said: ‘We will normally forward direct to the payday lender a cheque in settlement.

 

‘One thing that we find very surprising is the ability of some of these payday loan companies to regularly lose this settlement cheque, which has the effect of delaying settlement of the debt and incurring more very high interest rates for the trapped borrower.’

 

His company is frequently forced to send settlement cheques by recorded delivery before the payday loan firm will cancel the outstanding debt.

 

 

Watch out! The tax office lose forms sent so they can say they never had them so they then estimate tax owing and demand penalties.. It is a [problem] used to get more money just the same.

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