Payday Loan Lenders Do Not Trap Like Credit Card Companies

Some people like to obtain a payday cash advance for other reasons, such as securing tickets to a performance that will otherwise be sold out if they had to wait until payday, or to purchase a pair of designer shoes that are on sale today but not tomorrow. Although these situations are not real emergencies in a true sense, if you are usually quite good with your finances and you are certain you will have no trouble paying back the payday cash advance, then go ahead and obtain the payday cash advance loan.

This could be just the tip of the iceberg because most people do not know how to bring a complaint, while the lenders also keep customers in the dark.
Experts at Citizens Advice studied 665 payday loan cases dealt with by staff in the first half of 2013 and found at least 76per cent could have grounds for an official complaint.
More than a third involved issues with continuous payment authorities, where the lenders effectively snatch money from customers’ bank accounts without permission.
Some 12per cent involved harassment where lenders pestered people with phone calls and text messages rather than accept affordable repayment offers.
One in five were possible cases of fraud, where an individual was chased for a repayment on a loan they had not taken out. This is because some firms have failed to carry out proper checks on loan applicants with the result they have handed huge sums to criminals who have stolen the identities of innocent targets.
Where the Ombudsman upholds a complaint, the lender can be ordered to put things right. This can include paying a refund of repayments and charges plus compensation for any inconvenience caused.
If a consumer has difficulty making repayments, the lender should accept a reasonable offer to pay off the debt in installments. However, many pressure customers to roll over the loan, which will mean they end up paying even more.
Putting pressure on customers to roll over a loan in these circumstances could be a breach of the Ombudsman’s rules.
Citizens Advice said the firms appear to make it difficult for people to complain. Some four in five borrowers were not told how to complain if there is a problem.
The organisation’s chief executive, Gillian Guy, said: ’The level of debt and hardship caused by some payday loans is absolutely scandalous and people often feel completely powerless to do anything about it.
’But consumers can fight back. If you are struggling to pay back the loan Citizens Advice can help you sort out a reasonable repayment plan and if you make a successful complaint to the Financial Ombudsman service you could find you get a refund for an unauthorised payment or direct payday loans for unfair treatment.
’By making your voice heard you will expose the bad behaviour of lenders and put pressure on them to clean up their act which could help stop similar problems happening to other people.’
The organisation has put details on its website explaining both the rights of borrowers and the details of how to complain.
A spokesman for the ombudsman service said that payday loan customers have apparently been reluctant to make a complaint to date because they do not want to admit that they have used this form of credit.
However, he said: ’The big message is: Nobody is here to judge you. We understand that times are hard, the important thing is to ask for help.’
12 month payday loans have come under heavy scrutiny in recent months following an investigation by the Office of Fair Trading, which referred the industry to the Competition Commission after finding ’deep-rooted’ problems. There are particular concerns that they are not making proper checks that applicants can afford repayments.
Consumer minister Jo Swinson said: ’Unscrupulous lenders should not be getting away with shoddy treatment of their customers, and it has to stop. We are taking tough action to protect consumers from irresponsible lending, which has led to 15 firms leaving the payday market.’
She said a new regulator will police the industry from 2014 and it will have powers to clean up the industry, such as banning products, imposing unlimited fines and ordering firms to give consumers their money back.
’Consumers should also be aware of what types of practices are not OK. That’s why I fully support Citizens Advice’s work to help people know what their rights are and how to complain when things go wrong,’ she said.
The Consumer Finance Association said its members have improved practices in terms of making affordability checks and limiting loan roll-overs.