Thousands of people have received demands for loan repayments from Help Loan The debt collection agency used by Help Loan has stopped pursuing people alleged to have borrowed money from the payday loan firm.
Police say the personal details of at least 9,000 innocent Britons have been used to fraudulently take money from the Finnish-based firm.
Intrum Justitia says it has halted any collection action because of the scale of the fraud.
Help Loan believes the fraud has cost it at least £1.5m.
Security problem
The firm, which only started trading this summer, makes small loans at very high rates of interest. It offers people loans of between £50 and £300 which they must repay within 28 days.
These are often known as “payday loans” as they tide cash-strapped people over until their next salary payment. The company’s website says its application process takes no more than 10 minutes.
But lax security has allowed criminals to obtain thousands of £300 loans using stolen IDs. The first those people knew about it was when they received a demand for payment from the debt collectors.
Many are angry that despite already having contacted Help Loan and its debt collection company Intrum Justitia, they are still receiving letters demanding payment.
Continuing demands
Kim Hale from Hertfordshire got a crime reference number from the police and wrote to Help Loan’s parent company MCO Capital to say the firm had made a mistake the day after receiving her first letter in August.
But last week she got another repayment demand from Intrum Justitia, as she told Radio 4’s Money Box programme: “It seems amazing that these letters are still going out to people without anything that infers there might be a fraud going on.”
“We have decided to stop all reminder action on MCO cases”
Pascal Lebreu, head of western operations for Intrum Justicia
Pascal Lebreu, who is responsible for Intrum Justitia’s UK operations, says that since 27 October no more enforcement action has been taken against anyone alleged to owe MCO Capital money:
“We have decided to stop all reminder action on MCO cases. The level of fraud seems to be very high.”
Claims investigated
He said he was still reviewing his company’s relationship with MCO Capital and that he would take a decision on whether to end it next week.
“You can be sure if we don’t have any clear information, we will not continue anymore with them.”
MCO Capital says it already has a process in place so innocent people are not pursued.
“We are very sorry people have received distressing letters”
Adrian Kibbler, spokesman for MCO Capital
Adrian Kibbler, who speaks on behalf of the firm, said: “We are very sorry people have received distressing letters. If people believe they have been the victim of identity fraud, they can contact the company, there will be an investigation and the case will be closed.”
Incorrect interest
Money Box has also discovered that the Annual Percentage Rates quoted on the Help Loan website are highly inaccurate.
It states if someone borrowed £50 over 14 days, the APR is 1,877%. In fact it should be 132,965,598.
The Office of Fair Trading has confirmed this and says this will be part of its wider investigation into the company.
BBC Radio 4’s Money Box is broadcast on Saturdays at 1200 BST, and repeated on Sundays at 2100 BST.
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