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Loan Sharks

Catching Loan Sharks

They may not have fins or killer jaws, but loan sharks – or illegal moneylenders – are every bit as dangerous and predatory as their name suggests.

Trading Standards services have launched the biggest crackdown on loan sharks that the UK has ever seen. A specialist Illegal Money Lending Team is helping Trading Standards hunt them down.

More people are facing debt problems and some are being exploited by loan sharks. More than 1,500 families are affected nationwide every year. Victims are not only charged astronomical rates of interest, but very often face violence, intimidation or blackmail if they fall behind with their payments.

There is help!

If you or someone you know is a victim of a loan shark operating locally contact Trading Standards in strictest confidence on 0300 555 2222 or text ‘loan (space) shark (space) + your message’ to 60003

Loan Sharks - Dispelling the Myths

The Stop Loan Sharks Team is working with Trading Standards services to ensure that loan sharks are brought to justice. One of the things that has become apparent is that there are lots of myths around loan shark activities, that have no truth whatsoever. For example:

MYTH – Unlicensed money lending is not illegal

FACT – It is illegal for anyone to operate a money lending business if they do not have a license from the Office of Fair Trading

MYTH – You have to pay back what the loan shark says you owe

FACT – A loan made by an illegal money lender (without a license) is unenforceable without a validation order from the Office of Fair Trading. This means that you cannot legally be made to pay it back.

MYTH – If you borrow from a loan shark, you commit an offence

FACT – It is the loan shark who is behaving illegally. Reporting the loan shark’s activity will not get you into trouble with the authorities.

MYTH – Most people who use loan sharks do so to fund drug or alcohol abuse

FACT – Only 3 out of 10 people who borrow from loan sharks do so to fund drug or alcohol abuse. 7 out of 10 borrow money for day to day living, or to cover unexpected expense such as replacing an item that has broken down.

MYTH – Illegal money lending is a victimless crime

FACT – Clients of illegal money lenders are often intimidated into paying back substantially more than they borrowed, with threats of violence common. Whole communities are affected by their activities, as residents may be forced to turn to crime to enable them to pay back the inflated loans. Loan sharks are often linked to other criminal activity such as drug dealing and counterfeiting.

MYTH – Loan sharks provide a reasonable priced service

FACT – The average cost of borrowing from a loan shark is three times the price of the highest cost of legal credit. The highest interest rate the team have come across so far was 117,000% APR. One victim was receiving benefits of £74 per week. The loan shark took £50 a week, leaving them just £24 to live on.

If you would like to report illegal money lending to the team, you can call 0300 555 2222, at local rate including inclusive minutes from mobile phones.

Borrowing on the doorstep?

Tip 1 – Only borrow from legal lenders. Ask for proof the lender has a Consumer Credit Licence.

Tip 2 - People lending without a licence are illegal. You are not breaking the law if you borrow from someone without a licence but you are likely to be ripped off or worse.

Tip 3 – Illegal lenders are loan sharks
You may have been bitten by a loan shark if your loan keeps growing even though you pay regularly. One loan shark customer had to pay £50 a week out of her benefits of £74 per week. Another was charged 117,000% interest (APR).

Tip 4 – Some loan sharks threaten you when you can’t repay. These kind of loans are unenforceable without a court order.

Tip 5 – Most loan sharks don’t provide paperwork. You never know how much you have paid.

Tip 6 – Report your lender if you don’t think they have a licence. Phone the confidential help line 0300 555 2222. It is staffed 24 hours a day 7 days a week, 365 days a year. They will check to see if they are legal. You will not get into trouble with the authorities. Remember, it is the loan shark who is behaving illegally.

Tip 7 – You probably won’t have to repay loans from an illegal lender. Contact the helpline for guidance.

Tip 8 – If you think you’ve been bitten by a loan shark

Call 0300 555 2222 (charges are local rate including inclusive minutes from mobile phones).

Tip 9 - If in doubt give us a shout!