Borrowers are missing out on thousands of pounds in payday loan repayments using claim companies that take 30 percent of their cash.
Experts say these companies are “misleading” customers by not making it clear that you have to pay for their services.
When The Sun checked, two of the top four Google results for “payday loan compensation” were ads for claims handling companies – but none indicated in their ads that they would charge a fee.
The first ad, which involved a company called Payday.claims, went so far as to claim that there were “no upfront fees” and “no hidden fees.”
But it’s only in the fine print of the company’s website that it says it charges a 25 percent fee, and that fee is payable even when the money collected is used to pay off debts. existing.
The fine print also lists a host of other fees you will be charged, including a £ 25 fee for sending emails on your behalf if you cancel the claim before compensation is paid.
Another company, called Fast Track Reclaim, charges an even higher amount of 30 percent of any claim plus VAT – something it does not yet say in its Google ads.
When you click on the website, there is also no information about the fees other than in the fine print of the page where it incorrectly says there is a 24 percent fee.
It is only when you click to read the “frequently asked questions” that you find out that it actually charges 30% for payday loan repayments.
On a payday loan repayment of £ 1,000, that would be £ 300 of your money.
Although companies do not have to include fees in their advertisements under the rules of the Advertising Standards Authority (ASA), consumer experts have called the advertisements “misleading.”
Martyn James, consumer expert at Resolver, the online complaints tool, said: “Ads on Google can be completely misleading because they often trick you into believing that they will help you for free when they are not. do not.
“Claims handling companies charge you huge sums of money for something you can do for free, so it’s outrageous that they can avoid mentioning their fees in their advertisements.
“It’s money for nothing, so their charges should be direct.”
Sara Williams, a volunteer with the Citizens Advice charity, who also runs the Debt camel advice blog, added: “Payday loan claim companies charge an exorbitant amount for sending a simple email to a lender and then forwarding the complaint to the Financial Ombudsman Service after eight weeks.
“Many claims firms also refuse to take serious cases involving six-year loans to the Financial Ombudsman Service – they only want to process the easiest ones for which a simple email will work.”
“Instead, you can get an easy-to-follow template for free online.”
The ASA has taken action in the past when claims companies have indicated an amount that people can recover without any royalties being charged.
How to request a refund from payday lenders
YOU can claim compensation from a payday lender if the loan was unaffordable, even if you have finished paying it off.
If you believe you are entitled to compensation, you should follow these DebtCamel steps to find out how to make a claim.
1. Check if you sold the loan incorrectly
Before a lender gives you a loan, they must check whether you are able to repay it.
For a payday loan to be affordable, you need to be able to pay it off the next month as well as pay off your other bills and debts.
The loan was unaffordable if:
- you often renewed loans or borrowed again soon after repaying a loan;
- your loans from a lender were increasing in size;
- some reimbursements were late; Where
- the loan was a big part of your income.
Ask the lender for a copy of your loan details, such as when you took out it and how much interest you paid.
Compare it to your bank statements from the time you took it out and see if you could have paid off the loan after paying your bills.
2. Make a complaint
There are websites that will help you submit your complaint to the lender, but be aware that if you are successful, they will take part of your compensation.
DebtHacker.co.uk is a completely free tool that will help you in the same process.
If you prefer to do it yourself, you should write a letter or email citing “unaffordable loans” and requesting a full refund of the interest and fees you paid, plus the 8% interest on the loan. Ombudsman in addition.
Also request that the loan be removed from your credit report.
You can complain even if the lender has entered into administrative proceedings.
3. Contact the Mediator
If you have not heard from them after eight weeks, you should bring the matter to the Financial mediator.
You should also contact them if your complaint is dismissed, the repayment is too low, or if they refuse to consider loans that are over six years old and have been sold to a debt collector.
But be aware that you usually can’t complain to the ombudsman when the business has been foreclosed.
These companies are currently allowed to charge whatever fees they want, as the Financial Conduct Authority (FCA) only caps claims handling fees at 20% for PPI.
But he plans to introduce a cap on the fees companies charge payday loan borrowers.
As for Google, the search engine says that ads for payday lenders with 60-day repayment are banned, but it does allow ads for claims management companies.
A Google spokesperson said, “Because we want the ads people see on Google to be useful and relevant, we have policies that prevent ads for payday loans that are due within 60 days. according to the date of issue.
“If we discover sites that violate this rule, we will take appropriate action.”
The bad sale of payday loans is big business, with the number of complaints to the Financial Ombudsman Service was 40,000 in 2018, against 17,000 the previous year.
The problem is, many of these loans were unaffordable and shouldn’t have been given out in the first place – but people don’t realize they can recover for free.
We spoke to a dad who got £ 3,750 repayment on £ 600 payday loan he couldn’t afford it.
Blue Panda Finance, which is the company behind Payday.claims, did not respond to our request for comment.
A spokesperson for Quickly Finance, who is behind Fasttrackreclaim, said: “The company is in full compliance with all advertising and regulatory requirements regarding its website and advertising campaigns.
“While a number of consumers wish to initiate claims for payday loans and other areas on their own, a substantial number prefer to have a third party do it for them.
“A customer cannot progress through the website without agreeing to the terms and conditions which expressly state the fees.
“We consider the amount of the fee to be fair. These fees are within the normal parameters of complaints management services and regulators in this area have not capped these fees to date.”
The payday lenders themselves, charging up to 306% interest, have been target hardened Brits in Facebook groups.
In addition, we reveal the areas where loan sharks and payday lenders prey on people – and how to get affordable credit.
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