Wonga, a ‘direct talk’ payday loan startup, found sending fake law firm letters – TechCrunch
Wonga’s staple TV ad campaign, featuring cute “elderly” puppets, carries the company’s slogan “The Straight Talk Money”. But, following a decision by the British regulator, the Financial Conduct Authority (FCA), the British payday loan start-up and great European IPO hope, was deemed anything but straightforward.
The FCA today ruled that Wonga was guilty of “unfair and deceptive debt collection practices”, relating to letters she sent to clients of non-existent law firms, presumably with the aim of defeating them. lobby for them to pay as soon as possible.
Specifically, between 2008 and 2010, Wonga sent letters from “Barker & Lowe” and “Chainey, D’Amato and Shannon” – two entities that do not actually exist – to around 45,000 customers, giving the misleading impression that outstanding clients debts had been transferred to a law firm. To add insult to injury, Wonga says some customers also paid additional collection fees after sending these letters.
Too bad for the disturbances; it’s about as old as it gets in the debt collection industry. In fact, aside from $ 145 million in venture capital funding from Balderton, Accel, Greylock, Meritech, Dawn Capital, and Oak Investment Partners, I find it even harder to see how Wonga is different from many short-lived lenders. term, including those it claims to disrupt.
The company may speak well of its technological advantage, but it’s not like other financial services that don’t use a heavy dose of technology to take the friction out of lending money or doing credit checks. Fintechs, whether built in-house or provided by a third party, have long greased the dirty cogs of “cheap and easy” consumer credit.
In his defense, Wonga claims that the practice of sending false letters to law firms was voluntarily stopped by the company in November 2010 and that information was provided to the OFT (Office of Fair Trading), the regulator. of Wonga at the time, in January 2011. She now has to pay compensation, which could amount to 2.6 million pounds.
There will be those, of course, who will think the regulator hasn’t gone far enough and wonder how Wonga, after admitting wrongdoing, can still be licensed to trade. British MP Stella Creasy even interrogates why there is no criminal investigation.
I asked Wonga about his current debt collection procedures, as well as some other very basic facts, but have yet to hear of a media conference call that took place earlier in the year. day and couldn’t log in.
Of course, today’s decision isn’t the first time London-based company has been embroiled in controversy. Payday loan companies in the UK are increasingly feeling the heat, especially with the Archbishop of Canterbury’s campaign against Wonga – despite the Church of England inadvertently owning shares in the company – maybe talking about a pending billion dollar exit or a long-grass IPO right now.