Expensive lenders tempt women to borrow, but firms want self-regulation
Payday loan firms have come under fire from watchdogs for promoting themselves as a quick and easy way to raise cash for shopping trips – and even cosmetic surgery.
Financial Mail discovered several websites featuring pictures of young women laden with colourful shopping bags, though the industry claimed last week it was capable of ‘setting the standard of self-regulation and consumer credit’. One site suggests ‘cosmetic surgery’ as a reason for a loan.
Payday loan firms – often criticised as legal loan sharks – are recognised as the lender of last resort for those who have run out of credit lines.
Temptation: Payday lenders often entice consumers to take a high-interest loan
However, the short-term loans are
expensive, with APRs of more than 4,000 per cent, and can be even more
financially toxic because of the practice of ‘rolling over’ loans when
payment deadlines are missed.
A survey published last week suggested that as many as a quarter of Britons struggling with debt had a payday loan.
However, the payday firms now appear
to be widening their net to appeal to the Facebook generation, happy to
spend now and deal with the consequences later.
Stella Creasy, Labour MP for
Walthamstow, said: ‘This is another example of how the industry cannot
get its act together. The longer the Government leaves this, the worse
the situation will get. We should be warning people that if you don’t
have the money, don’t spend it.’
Nadineloans.co.uk, which Financial
Mail discovered has links to payday giant The Money Shop, features
cheerful young women, one of whom is holding bags of shopping.
When we applied for a loan under an
assumed name, the site redirected us through to The Money Shop, which is
owned by American multinational Dollar Financial.
A spokesman for The Money Shop told
Financial Mail: ‘We have no direct link with nadineloans.co.uk, but it
is used by one of our affiliate companies. Since being made aware of the
site, The Money Shop has suspended any potential loan applications from
nadineloans.co.uk.’
The Advertising Standards Authority
has previously upheld a complaint against The Money Shop over an advert
considered to be ‘irresponsible because it trivialised the decision to
take out a loan’.
The advert had shown two women and a man each dreaming of what they would buy with a 1,000 loan.
Damon Gibbons of the Centre for Responsible Credit said: ‘The industry seems to be expanding at a massive rate.’
Meanwhile, savingaccountpaydayloans.co.uk lists cosmetic surgery as an option for taking a loan.
We applied for a loan while posing as
an unemployed 18-year-old living with her parents. This linked through
to two other websites then gave quotes for loan terms.
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- 2011 was record year for the number of women breaking in to boardrooms