No-one sensible will shed a tear for Wonga. But its success was a symptom of something bigger: the failure to provide vulnerable people with a desperately-needed safety netby Dawn Foster / August 30, 2018 / Leave a comment
When Wonga was established, the advertising for the company pitched the payday loan company as something new and original in finance. Cutesy graphics framed sliding buttons laying out the interest and repayment period of each loan, and the ads for the business followed you around the internet and nestled in the ad breaks on whichever channel you watched.
In reality, they were identical to all the other high-interest lenders across the market: the obscene interest and deliberate targeting of people in poverty and crisis meant that while some people paid the loans back without issue, many were forced to ‘roll over’ payments, or take out other loans to pay off the original sum, spiralling into debt rapidly.
Now, Wonga is rumoured to be facing collapse: the company have stopped offering new loans to customers, and a surge in compensation claims has led the firm to issue a statement that refused to rule out going into administration.
There will be few tears shed by anyone sensible. The company were forced to write off £220m in loans in October 2014 due to failing to properly apply affordability checks as a lender, and paid £2.6m in compensation after admitting to sending letters from fake legal firms to customers to attempt to scare them into paying their arrears.
The firm is unmistakably predatory, and it comes as no surprise that the boom in payday lenders occurred after the financial crash and just when austerity was beginning to bite in household budgets….