0:00:02 > 0:00:07We asked you to tell us who has left you feeling ripped off,
0:00:07 > 0:00:11and you contacted us in your thousands, by post, e-mail,
0:00:11 > 0:00:13even stopping us on the street.
0:00:13 > 0:00:15And the message could not be clearer...
0:00:15 > 0:00:19There's too much focus on profit and less on customer care.
0:00:19 > 0:00:23It's so hard to complain. Companies make it so difficult to complain.
0:00:23 > 0:00:26You told us, with money tighter than ever,
0:00:26 > 0:00:29you need to be sure every pound counts.
0:00:29 > 0:00:32All my money is very heard-earned, so when I go to spend it,
0:00:32 > 0:00:34I expect value for money.
0:00:34 > 0:00:36So whether it's a deliberate rip-off,
0:00:36 > 0:00:39a simple mistake or a catch in the small print,
0:00:39 > 0:00:43we'll find out why you're out of pocket and what you can do about it.
0:00:43 > 0:00:45Your stories, your money.
0:00:45 > 0:00:47This is Rip Off Britain.
0:00:49 > 0:00:52Hello. It's good to have you here again on Rip Off Britain
0:00:52 > 0:00:55because this is the series that is definitely on your side
0:00:55 > 0:00:57in the battle to get you value for money.
0:00:57 > 0:01:00And to make sure that when you sign on the dotted line,
0:01:00 > 0:01:03you really do end up with what you expected.
0:01:03 > 0:01:06Which, I have to say, is not what happened to the people whose
0:01:06 > 0:01:08stories we're going to be hearing about today.
0:01:08 > 0:01:12Yes, one way or another, they've all got into trouble with the sort of businesses that
0:01:12 > 0:01:14have flourished, while the rest of the country has been having
0:01:14 > 0:01:16a really tough time financially.
0:01:16 > 0:01:18We're talking here about payday loan
0:01:18 > 0:01:20and debt management companies.
0:01:20 > 0:01:22They can seem like the answer to your problems,
0:01:22 > 0:01:25but sometimes, I'm afraid, they only add enormously to them.
0:01:25 > 0:01:28Yes, the payday loan industry in particular has
0:01:28 > 0:01:31come in for a barrage of criticism in recent months,
0:01:31 > 0:01:33so we'll find out how much of that is deserved,
0:01:33 > 0:01:35and we'll see what alternatives there are
0:01:35 > 0:01:39if you're desperate to get your hands on some money, fast.
0:01:39 > 0:01:42Coming up, how payday lenders could end up chasing you for money
0:01:42 > 0:01:46that someone else has managed to take out in your name...
0:01:46 > 0:01:48What was your reaction?
0:01:48 > 0:01:49I couldn't believe it.
0:01:49 > 0:01:51I didn't know what to do.
0:01:51 > 0:01:53You never think something like that's going to happen to you.
0:01:53 > 0:01:56..the company that promised to get this woman out of debt,
0:01:56 > 0:02:00but only succeeded in making her worse off...
0:02:00 > 0:02:05I spent a lot of time crying on friends', family's shoulders
0:02:05 > 0:02:07because I just didn't know which way to turn.
0:02:07 > 0:02:11..and more advice handed out at our pop-up shop.
0:02:15 > 0:02:18Do you need a few pounds to tide you over until payday?
0:02:19 > 0:02:21Happy to pay that bit more for your loan?
0:02:23 > 0:02:27But also happy to be misled, given a loan you can't afford?
0:02:27 > 0:02:30Encouraged to take it for longer than you intended?
0:02:30 > 0:02:33Then chased aggressively when you get into trouble?
0:02:33 > 0:02:35Well, a payday loan could be just for you.
0:02:35 > 0:02:39That was the damning appraisal by the Office of Fair Trading
0:02:39 > 0:02:41of at least some payday lenders.
0:02:41 > 0:02:43Earlier this year,
0:02:43 > 0:02:46they told the industry's 50 biggest firms to clean up their act.
0:02:46 > 0:02:49So does this mean Britain's most controversial lenders will
0:02:49 > 0:02:51change their ways?
0:02:51 > 0:02:55I've come to the Office of Fair Trading to find out.
0:02:55 > 0:02:57David, we started on Rip Off Britain
0:02:57 > 0:03:01investigating payday loans as far back as early 2011.
0:03:01 > 0:03:04The question is, why has it taken so long to crack down?
0:03:04 > 0:03:07The first thing the Office of Fair Trading had to do was
0:03:07 > 0:03:10establish the facts.
0:03:10 > 0:03:13What we realised early on was that many people had sometimes
0:03:13 > 0:03:16very strong views about the payday industry -
0:03:16 > 0:03:19the good about it and, largely, the bad about it.
0:03:19 > 0:03:22But when we came to look for hard, factual evidence,
0:03:22 > 0:03:24we found there was very little.
0:03:24 > 0:03:25So what we did was,
0:03:25 > 0:03:30we did an in-depth inspection of the 50 leading payday lenders.
0:03:30 > 0:03:33We estimate they account for about 90% of the market.
0:03:33 > 0:03:36Amongst the concerns that led to the review
0:03:36 > 0:03:38were the ways in which lenders target customers
0:03:38 > 0:03:40and sell their loans,
0:03:40 > 0:03:42and whether enough checks are made to see
0:03:42 > 0:03:45if borrowers are capable of keeping up with repayments.
0:03:45 > 0:03:47Often, the adverts are very misleading.
0:03:47 > 0:03:50The way they advertise the loans are very misleading.
0:03:50 > 0:03:54Too often, the payday lenders don't give borrowers all the information
0:03:54 > 0:03:58they need up front to make an informed decision.
0:03:58 > 0:04:02Very importantly, all too often payday lenders don't check
0:04:02 > 0:04:05whether a loan is affordable for a particular person.
0:04:05 > 0:04:08So affordability assessments are absolutely crucial.
0:04:08 > 0:04:10How have you tolerated that for so long
0:04:10 > 0:04:13when you know this practice is going on?
0:04:13 > 0:04:16Well, we don't tolerate it, is the point.
0:04:16 > 0:04:20Once we have the evidence which we now have, that the payday lenders
0:04:20 > 0:04:22were not doing the affordability assessments,
0:04:22 > 0:04:24we have cracked down hard upon them.
0:04:24 > 0:04:26But in practice, they're not.
0:04:26 > 0:04:31If they are not still doing the affordability assessments, then the
0:04:31 > 0:04:34OFT team will not hesitate to take enforcement action against them.
0:04:34 > 0:04:37If necessary, we will remove their consumer credit licences
0:04:37 > 0:04:39and they will be out of business.
0:04:39 > 0:04:43It was affordability that caused problems for Elizabeth Matthews.
0:04:43 > 0:04:45Elizabeth was a full-time carer for her mother,
0:04:45 > 0:04:47but when her mum passed away
0:04:47 > 0:04:49and Elizabeth's carer's allowance stopped,
0:04:49 > 0:04:52she found it very hard to find work.
0:04:52 > 0:04:55It's much more difficult to find work cos I'm older now, as well.
0:04:55 > 0:04:59When I used to work, jobs used to be quite easy to get.
0:04:59 > 0:05:03So Elizabeth signed on, but found it difficult to make ends meet.
0:05:03 > 0:05:07When you've been out of work for quite while, it really is difficult.
0:05:07 > 0:05:10Without the support of my family, I don't think I could have got through.
0:05:10 > 0:05:13Slowly, Elizabeth found she was struggling to get enough
0:05:13 > 0:05:15money together to pay the bills.
0:05:15 > 0:05:19I could pay certain things off, then I had no money for food.
0:05:19 > 0:05:22And then I was getting my utility bills in and I couldn't pay them.
0:05:22 > 0:05:24And it was very worrying.
0:05:24 > 0:05:27Elizabeth needed cash fast, and with few other options,
0:05:27 > 0:05:29she took out a payday loan.
0:05:29 > 0:05:33I first saw payday loans advertised on the television.
0:05:33 > 0:05:36I used to watch them and think, "I would never get one of those."
0:05:36 > 0:05:39And then, suddenly, I think, "Oh, I'm going to need some help here."
0:05:39 > 0:05:42I applied for the loan on the internet, and I think it
0:05:42 > 0:05:46takes about 15 minutes and then they say you've been accepted or not.
0:05:46 > 0:05:48It's quite easy, cos you don't talk to anybody,
0:05:48 > 0:05:50which makes it even easier.
0:05:50 > 0:05:53Because Elizabeth was so confident she'd find a job, she ticked
0:05:53 > 0:05:59the box that said she was employed, and the loan for £400 was approved.
0:05:59 > 0:06:03Oh, I'll have a job at the end of the month, surely - four weeks
0:06:03 > 0:06:05and I'll be working again so I can pay them off.
0:06:05 > 0:06:09But four weeks flew by and Elizabeth wasn't able to find work.
0:06:09 > 0:06:11When it was coming to the end of the four weeks
0:06:11 > 0:06:14and I realised the money had to be paid back, I was so worried.
0:06:14 > 0:06:16I couldn't sleep, I felt really anxious.
0:06:16 > 0:06:18And it was with me 24 hours a day.
0:06:18 > 0:06:21I think, "How am I going to pay this money back?"
0:06:21 > 0:06:23Elizabeth did mange to pay back the loan,
0:06:23 > 0:06:26but it put her in even greater financial difficulty.
0:06:26 > 0:06:30So before long, she was forced to take out a new loan.
0:06:30 > 0:06:33With no job and just a basic income, Elizabeth struggled to make
0:06:33 > 0:06:37ends meet and make the repayments on this second loan.
0:06:37 > 0:06:40I saw another payday loan company and I thought, "That'll expand it
0:06:40 > 0:06:44"for another four weeks, I can borrow some money off of them."
0:06:44 > 0:06:47So Elizabeth took out a third loan from a different lender.
0:06:47 > 0:06:49As with the last two loans,
0:06:49 > 0:06:51she thought she would be able to find work by the end
0:06:51 > 0:06:54of the month, so she didn't tell the lender she was unemployed.
0:06:54 > 0:06:56And when no job materialised,
0:06:56 > 0:07:01Elizabeth's finances got worse still, so she took out another loan.
0:07:01 > 0:07:03I knew when I took out the fourth loan it was really getting
0:07:03 > 0:07:07ridiculous and that I was getting myself into a lot of trouble.
0:07:07 > 0:07:09What started as a loan of a few hundred pounds
0:07:09 > 0:07:12had now spiralled into thousands.
0:07:12 > 0:07:14Faced with debt she couldn't manage,
0:07:14 > 0:07:18Elizabeth went to her local Citizens Advice Bureau for help.
0:07:18 > 0:07:20The CAB were really good.
0:07:20 > 0:07:24They helped me make out a pay plan, so I told them loans that I had,
0:07:24 > 0:07:27the money that was coming in, the money that was going out.
0:07:27 > 0:07:29'And then they worked out how much I could afford to pay
0:07:29 > 0:07:31'back to the payday loan companies.'
0:07:31 > 0:07:35And they were informed about this and they accepted the offer.
0:07:35 > 0:07:36'And thanks to this advice,
0:07:36 > 0:07:39'Elizabeth's debt is now under control.
0:07:39 > 0:07:41'She still has debts with a number of payday lenders,
0:07:41 > 0:07:43'but they've frozen
0:07:43 > 0:07:47'the interest and agreed to let her pay them back in manageable chunks.'
0:07:47 > 0:07:49When I walked out the CAB, I felt I had a great weight
0:07:49 > 0:07:51taken off my shoulders.
0:07:51 > 0:07:54Elizabeth admits she lied by telling the lenders that she had a job,
0:07:54 > 0:07:58but says that sheer desperation led her to do it.
0:07:58 > 0:08:00It's a terrible feeling, being in debt.
0:08:00 > 0:08:03It's not only humiliating but it's very worrying as well.
0:08:03 > 0:08:06I mean, you can't buy things that you normally used to buy
0:08:06 > 0:08:09and you have to count every penny that you spend.
0:08:09 > 0:08:12At least one of the lenders that Elizabeth borrowed from has
0:08:12 > 0:08:14told us that she wouldn't have been approved for a loan
0:08:14 > 0:08:17if they had known that she was unemployed.
0:08:17 > 0:08:19They point out that when Elizabeth applied,
0:08:19 > 0:08:22she passed their credit checks and had a good credit history,
0:08:22 > 0:08:25so there was no reason to reject her application.
0:08:25 > 0:08:28They also say that they take all applications in good faith
0:08:28 > 0:08:30and they can't be held accountable
0:08:30 > 0:08:32for lending to people who fail to meet
0:08:32 > 0:08:36their repayments if that person lied when they first took out the loan.
0:08:36 > 0:08:38But that's not always the case.
0:08:38 > 0:08:41Some payday lenders do offer loans to unemployed people,
0:08:41 > 0:08:45as long as they say they can comfortably afford the repayments.
0:08:45 > 0:08:49It's cases like these that lead industry critics to say that
0:08:49 > 0:08:52loans are just too simple to get hold off.
0:08:52 > 0:08:53Russell Hamblin-Boone,
0:08:53 > 0:08:57chief executive of the Consumer Finance Association, which is
0:08:57 > 0:09:00the umbrella body for about 60% of the industry,
0:09:00 > 0:09:03is confident that most lenders get it right.
0:09:03 > 0:09:07We do all of the same checks as any other credit provider,
0:09:07 > 0:09:10whether it's for a credit card or a bank loan.
0:09:10 > 0:09:12The difference is not in the speed of the application process,
0:09:12 > 0:09:14it's in the speed of the delivery.
0:09:14 > 0:09:18But you can't, in that period of time, get documents that prove that
0:09:18 > 0:09:20somebody can pay back a loan.
0:09:20 > 0:09:22It's impossible to do it in ten minutes.
0:09:22 > 0:09:23For the majority of people,
0:09:23 > 0:09:26the information's held by credit reference agencies.
0:09:26 > 0:09:28If you have a more difficult case where you have to get
0:09:28 > 0:09:31the paper documentation, then that's what's requested.
0:09:31 > 0:09:34The most recent report from the Citizens Advice Bureau,
0:09:34 > 0:09:38they actually carried out this survey on payday loans.
0:09:38 > 0:09:41From 113 different lenders,
0:09:41 > 0:09:4487% did not ask the borrower to
0:09:44 > 0:09:48provide documents to prove they could afford to repay the loan.
0:09:48 > 0:09:50That is a huge proportion.
0:09:50 > 0:09:51It depends.
0:09:51 > 0:09:54If you're online, it's difficult to ask somebody for documents -
0:09:54 > 0:09:57that's why you use a credit reference agency that have
0:09:57 > 0:09:59got the data available electronically.
0:09:59 > 0:10:01And I don't know
0:10:01 > 0:10:03whether they're asking that question of people online.
0:10:03 > 0:10:06In store, of course, you have to provide the documents.
0:10:06 > 0:10:08What checks do you carry out then,
0:10:08 > 0:10:10to make sure people can afford to pay it back?
0:10:10 > 0:10:14For example, you've got to have a job.
0:10:14 > 0:10:16You won't be lent to if you're on certain benefits.
0:10:16 > 0:10:21We use credit reference agencies and churn thousands of pieces of data
0:10:21 > 0:10:24very quickly, because the technology exists to be able to do that.
0:10:24 > 0:10:27Your industry has taken such a bashing recently from everybody -
0:10:27 > 0:10:31from MPs, from charities and even the Archbishop of Canterbury.
0:10:31 > 0:10:33And, of course, the Office of Fair Trading.
0:10:33 > 0:10:35How have you reacted to that, as an industry?
0:10:35 > 0:10:39The first thing that we did, towards the back end of last year,
0:10:39 > 0:10:42was put in place standards through a code of practice.
0:10:42 > 0:10:45We've now capped the number of times you can extend your loan,
0:10:45 > 0:10:49so you can only extend your loan three times.
0:10:49 > 0:10:53We've put in place a freeze on fees and interest
0:10:53 > 0:10:55if you get into financial difficulty.
0:10:55 > 0:10:58Earlier this year, the Office of Fair Trading gave the big lenders
0:10:58 > 0:11:02a deadline, to make sure that they follow the rules.
0:11:02 > 0:11:06Since then, 19 of those companies have pulled out of the market.
0:11:06 > 0:11:08And the whole industry has been referred to the
0:11:08 > 0:11:11Competition Commission for further scrutiny.
0:11:11 > 0:11:15It's something, Elizabeth thinks, can't happen soon enough.
0:11:15 > 0:11:17I think payday loans is a good thing as long
0:11:17 > 0:11:21as you know you can afford to pay them back at the end of the month.
0:11:21 > 0:11:22Don't be sucked into them,
0:11:22 > 0:11:25because they are very easy to get, and I think that's what makes
0:11:25 > 0:11:29it easier for people to fall in the trap of getting payday loans.
0:11:29 > 0:11:31They think it's going to be very easy to pay them back
0:11:31 > 0:11:34at the end of the month, but that's not always the case.
0:11:39 > 0:11:42Our next story has two of the biggest issues
0:11:42 > 0:11:43that the authorities are
0:11:43 > 0:11:46currently worrying about rolled into one.
0:11:46 > 0:11:49That's identity theft and payday loans.
0:11:49 > 0:11:53Now, you would assume that if you've never taken out a payday loan,
0:11:53 > 0:11:55you will never be asked to pay one back.
0:11:55 > 0:11:58But if someone steals your identity,
0:11:58 > 0:12:02you may well find that they've used it to get their hands on some
0:12:02 > 0:12:06easy cash, and then it is you that ends up being chased to pay it back.
0:12:08 > 0:12:12They're the best-known payday loans company in the business.
0:12:14 > 0:12:17But it seems that not all of the money that flows through
0:12:17 > 0:12:20Wonga's systems is as straight as the company might like.
0:12:20 > 0:12:23Some people who have never used a payday loan company
0:12:23 > 0:12:26have faced demands from Wonga for repayment.
0:12:26 > 0:12:29Or worse, they've had money taken out of their bank account.
0:12:29 > 0:12:31Thanks to fraudsters,
0:12:31 > 0:12:34they've been saddled with someone else's debt and, as a result,
0:12:34 > 0:12:37they're being chased for hundreds, indeed in some cases
0:12:37 > 0:12:41thousands of pounds that they certainly do not owe.
0:12:41 > 0:12:44Student Victoria Thornley is just one of the people that it's
0:12:44 > 0:12:45happened to.
0:12:45 > 0:12:49She was baffled to receive a missed payment letter from wonga.com
0:12:49 > 0:12:52saying that she owed them over £500.
0:12:52 > 0:12:56But she'd never taken a loan with them, so didn't owe them a penny.
0:12:56 > 0:13:01I was down at university and my mum rang me and was shouting,
0:13:01 > 0:13:04"What are you doing, taking out loans?"
0:13:04 > 0:13:07Obviously, I hadn't.
0:13:07 > 0:13:10I'd received a letter through the post to my home address and it was
0:13:10 > 0:13:15saying I'd taken out just under £500, um, loan with Wonga,
0:13:15 > 0:13:20that I hadn't paid it back in time and I owed them about £590.
0:13:20 > 0:13:21What was your reaction?
0:13:21 > 0:13:23I couldn't believe it.
0:13:23 > 0:13:24I didn't know what to do.
0:13:24 > 0:13:27You never think something like that's going to happen to you.
0:13:27 > 0:13:30Victoria called Wonga, and it quickly became clear that she
0:13:30 > 0:13:34knew nothing about it, she'd been a victim of identity theft.
0:13:34 > 0:13:36Someone, somewhere had set up an account
0:13:36 > 0:13:39and taken out a loan using her details.
0:13:39 > 0:13:43They'd pocketed the cash, but she'd been hit with the bill.
0:13:43 > 0:13:47When they were asking me my details on the phone, obviously
0:13:47 > 0:13:49something I'd never given them, they were asking my date of birth
0:13:49 > 0:13:54and I was telling them and they were saying, "Yeah, that was correct. Your postcode's correct."
0:13:54 > 0:13:57And it's just crazy that somebody can get all that information
0:13:57 > 0:14:00about you, that I'd never given them before.
0:14:00 > 0:14:04They told me I had to ring the police, get a crime log number, which I did.
0:14:04 > 0:14:06Then I had to ring them back, at my expense,
0:14:06 > 0:14:08and they said it was going to be 48 hours.
0:14:08 > 0:14:11I never heard anything back from them so I had to ring them back
0:14:11 > 0:14:15a couple of days later and they told me that they'd lost my phone number,
0:14:15 > 0:14:17and that I would have to wait another 48 hours for them
0:14:17 > 0:14:20to sort things out again.
0:14:20 > 0:14:23Eventually, Wonga called Victoria and told her that the account,
0:14:23 > 0:14:26mysteriously opened in her name and with her contact details,
0:14:26 > 0:14:28had been closed down.
0:14:28 > 0:14:30But just two months later,
0:14:30 > 0:14:33she received yet another letter from Wonga demanding repayment
0:14:33 > 0:14:38of £263 for a new loan, which, again, she had not taken out.
0:14:38 > 0:14:42If somebody had tried to open another account, why hadn't it flashed
0:14:42 > 0:14:45up on the screen, "This account's been done for fraud again"?
0:14:45 > 0:14:48Although, Victoria was told by Wonga that the fraudulent loans
0:14:48 > 0:14:50will not affect her credit rating, it has made her
0:14:50 > 0:14:55worry about what someone might do with her personal details again.
0:14:55 > 0:14:58I thought that, to open an account like this,
0:14:58 > 0:15:02they must have had to have a bank account set up in my name...
0:15:02 > 0:15:03That could still be out there.
0:15:03 > 0:15:06There's a bank account in my name, which I don't know about.
0:15:06 > 0:15:09They can go to any type of loan provider and do that again,
0:15:09 > 0:15:11it'll happen again. I'll have to go through that.
0:15:11 > 0:15:12Fraud expert Andrew Goodwill
0:15:12 > 0:15:15believes that it's possible with some payday lenders
0:15:15 > 0:15:18that the bank account that the loan is paid into does not
0:15:18 > 0:15:22have to be the same as the one that will be used to pay the debt back.
0:15:22 > 0:15:26And so, even though you've never received any money, if a fraudster
0:15:26 > 0:15:30has used your details, it could be you that's now chased for the loan.
0:15:30 > 0:15:36Andrew, how do people like Victoria get caught out as victims of fraud?
0:15:36 > 0:15:39It could be something simple like her details be thrown
0:15:39 > 0:15:42away in a dustbin and appear in a landfill site.
0:15:42 > 0:15:45Somebody collects them up, uses that information, goes online,
0:15:45 > 0:15:49finds out all the extra bits that you would need, like date of birth,
0:15:49 > 0:15:52then you've got details that you can use to open up accounts like this.
0:15:52 > 0:15:57How can you open up an account if the name that you are giving is not
0:15:57 > 0:16:00the same as the bank account that you're going to put the money into?
0:16:00 > 0:16:02The name really doesn't have any relationship to the bank
0:16:02 > 0:16:05account number - it's not something that a bank's going to check.
0:16:05 > 0:16:08All they're interested in is the number itself of the account.
0:16:08 > 0:16:10So, it could be Joe Bloggs.
0:16:10 > 0:16:14At the end of the day, the bank is going to put money into that account.
0:16:14 > 0:16:16When someone becomes a victim of fraud,
0:16:16 > 0:16:18this can really be disastrous for them, can't it? It can.
0:16:18 > 0:16:21No-one is safe from fraud in this country at the moment.
0:16:21 > 0:16:23Fraud is so big, it's just enormous.
0:16:23 > 0:16:27And I don't think that anybody in this country could honestly
0:16:27 > 0:16:29say that they don't know anybody,
0:16:29 > 0:16:32or they haven't been a victim of fraud themselves.
0:16:32 > 0:16:33This year,
0:16:33 > 0:16:37the Office of Fair Trading told the top 50 payday loan companies that
0:16:37 > 0:16:41they must have adequate procedures to prevent identity fraud.
0:16:41 > 0:16:45They even closed down one payday loan company - MCO Capital,
0:16:45 > 0:16:46and fined them half a million pounds,
0:16:46 > 0:16:50partly for failing to make sufficient ID checks.
0:16:50 > 0:16:53However, some online payday lenders say the right checks
0:16:53 > 0:16:56ARE in place to protect people.
0:16:56 > 0:16:58But Nadia Mornsey wouldn't agree.
0:16:58 > 0:17:02Like Victoria, she fell victim to a fraud exploiting Wonga,
0:17:02 > 0:17:05when criminals got hold of her debit card details.
0:17:05 > 0:17:09Nadia only discovered this when Wonga took almost £1,000 from her
0:17:09 > 0:17:13account to pay off two loans in her name that she knew nothing about.
0:17:14 > 0:17:16What was your reaction?
0:17:16 > 0:17:17I was pretty upset, to be honest.
0:17:17 > 0:17:19Partly because I was just
0:17:19 > 0:17:22astounded that it was allowed to happen.
0:17:22 > 0:17:26Did they explain how it was that your card details were being
0:17:26 > 0:17:28used for someone else to get money in your name?
0:17:28 > 0:17:31There was no explanation whatsoever from Wonga.
0:17:31 > 0:17:35They just issued a standard statement saying they do take
0:17:35 > 0:17:36security measures.
0:17:36 > 0:17:38But ultimately,
0:17:38 > 0:17:42it seems like they are issuing loans to unscrupulous people and then not
0:17:42 > 0:17:48insisting that the same card details be used to pay back the loans.
0:17:48 > 0:17:52Nadia's bank refunded the stolen money, but she still wants answers
0:17:52 > 0:17:57as to how Wonga could let her card details be used fraudulently.
0:17:57 > 0:17:59Wonga insist that their fraud levels
0:17:59 > 0:18:02remain well below the industry average.
0:18:02 > 0:18:04But I wanted to know exactly what they're doing to tackle this
0:18:04 > 0:18:07sort of fraud, and what they say to people like Nadia
0:18:07 > 0:18:11and Victoria, who are disappointed with how their problem was handled.
0:18:11 > 0:18:13The company didn't want to be interviewed,
0:18:13 > 0:18:15but I gave them a call to find out more.
0:18:15 > 0:18:19Are you confident that you have in place enough security to
0:18:19 > 0:18:23ensure that the public are protected?
0:18:23 > 0:18:25Wonga stressed that what's happening here is criminal,
0:18:25 > 0:18:29and though they're confident that they're doing all they can to
0:18:29 > 0:18:33stop it, fraudsters will always find new ways to beat the system.
0:18:33 > 0:18:34They said...
0:18:38 > 0:18:41And they work with both industry-leading service providers
0:18:41 > 0:18:43and the police...
0:18:46 > 0:18:48They also told us that they're...
0:18:53 > 0:18:55And while...
0:18:55 > 0:18:57they have a dedicated team to ensure...
0:19:02 > 0:19:04They accept that these two cases...
0:19:09 > 0:19:12But while, in the end, it was Wonga that lost out financially
0:19:12 > 0:19:16as a result of this scam, Nadia's experience has left her worried
0:19:16 > 0:19:19that a fraudster might make use of her details again.
0:19:19 > 0:19:21I've been keeping a really close eye on things now
0:19:21 > 0:19:26because my card had been somehow cloned or some criminal has
0:19:26 > 0:19:29managed to get hold of the details, so it's entirely possible by the
0:19:29 > 0:19:33sounds of it, that it could happen again - to me or to anyone else.
0:19:37 > 0:19:39We've hit the road again,
0:19:39 > 0:19:43and this year out annual pop-up shop visited Liverpool.
0:19:43 > 0:19:45We've been hearing your stories...
0:19:45 > 0:19:47If I'm paying £150 for a dress,
0:19:47 > 0:19:49I expect it to be worn more than twice.
0:19:50 > 0:19:52..solving your problems....
0:19:52 > 0:19:55What I've learnt from this experience is never to book
0:19:55 > 0:19:57with that company again.
0:19:57 > 0:20:00..and giving you top consumer tips.
0:20:00 > 0:20:03If you're going to buy a high-cost item, buy it from a reputable
0:20:03 > 0:20:06retailer, somebody that you know, that you've got reviews for.
0:20:08 > 0:20:11Before calling into the shop to speak to our experts,
0:20:11 > 0:20:14many of you took the opportunity to visit our complaints corner,
0:20:14 > 0:20:17where you weren't short of things to get off your chest.
0:20:17 > 0:20:20What annoys me is cold calls.
0:20:20 > 0:20:22Cash machines that charge you for getting your own money out.
0:20:22 > 0:20:24I think they should be banned.
0:20:24 > 0:20:27What annoys me is really bad customer service.
0:20:27 > 0:20:28You don't feel like a valued customer.
0:20:28 > 0:20:31When we go into a store and there's a very large queue
0:20:31 > 0:20:35and there's only one person serving customers.
0:20:35 > 0:20:37And that's it, really.
0:20:39 > 0:20:42'Back inside, perhaps one of the saddest stories
0:20:42 > 0:20:45'we heard was from Joanne Yude and her mother Betty.
0:20:45 > 0:20:48'Angela and financial expert Sarah Penells heard how
0:20:48 > 0:20:51'cold callers from a catalogue company somehow persuaded
0:20:51 > 0:20:55'Betty, in her late 70s at the time, to take out a loan for £1,500.'
0:20:57 > 0:20:59They delivered that by courier.
0:20:59 > 0:21:04So she put it in the bank, and it sat there, so she didn't need it.
0:21:04 > 0:21:05'But it didn't end there.
0:21:05 > 0:21:08'Soon, the same company called her again
0:21:08 > 0:21:12'and talked her into taking on another loan for £1,500.'
0:21:12 > 0:21:13Four or five months later,
0:21:13 > 0:21:17they sent her another cheque for another £1,500.
0:21:17 > 0:21:20Can I just ask you, Betty, why did you give into them
0:21:20 > 0:21:24when they kept ringing? What made you say yes?
0:21:24 > 0:21:25I don't know. I don't know.
0:21:25 > 0:21:28I've got a big family and Christmas was coming up.
0:21:28 > 0:21:30I just gave in.
0:21:30 > 0:21:32'Then things got worse.
0:21:32 > 0:21:36'Her bank offered to clear the debt - now at a huge £8,900,
0:21:36 > 0:21:40'thanks to crippling interest payments, by also offering a loan.
0:21:40 > 0:21:45'But the one they sold her was for a much larger amount than the debt - £12,000.'
0:21:45 > 0:21:48She ended up paying more than her outgoings.
0:21:48 > 0:21:50So it just doesn't make sense.
0:21:50 > 0:21:53It just seems that they found a vulnerable old lady
0:21:53 > 0:21:55and ripped her off, basically.
0:21:55 > 0:21:57How can they do that?
0:21:57 > 0:21:59I have to say, this is one of the worst cases I've seen through
0:21:59 > 0:22:01Rip Off Britain.
0:22:01 > 0:22:04I would actually complain about both loans.
0:22:04 > 0:22:07A lender, whether it's a bank or a catalogue company,
0:22:07 > 0:22:10should lend in a, what's called, responsible way.
0:22:10 > 0:22:13And this wasn't, because it never makes financial sense to
0:22:13 > 0:22:15borrow money you don't need.
0:22:15 > 0:22:17And when you say complain, to whom should she be complaining?
0:22:17 > 0:22:20The head office of the catalogue company.
0:22:20 > 0:22:24Do it in writing, always keep a copy of the letter you send.
0:22:24 > 0:22:25Mark it "formal complaint".
0:22:25 > 0:22:28Give them both eight weeks to look into your case
0:22:28 > 0:22:31and then take it straight to the Financial Ombudsman Service.
0:22:31 > 0:22:34I think that they would be very interested in this case,
0:22:34 > 0:22:38because I think there have been several regulations that have
0:22:38 > 0:22:39been quite blatantly breached here.
0:22:39 > 0:22:43'The Financial Ombudsman has the power to return all of Betty's
0:22:43 > 0:22:44'money, if appropriate.
0:22:44 > 0:22:47'So after hearing Sarah's advice, Joanne is going to keep
0:22:47 > 0:22:50'fighting her mum's corner until she gets this resolved.'
0:22:54 > 0:22:58Still to come, an alternative to payday lenders.
0:22:58 > 0:23:00Does the Church have the answer?
0:23:00 > 0:23:02They explain it you.
0:23:02 > 0:23:04It's all written down, there's no small print,
0:23:04 > 0:23:06it's all there in black and white.
0:23:08 > 0:23:11Next, an industry that promises to make things better
0:23:11 > 0:23:13but too often seems to do just the opposite.
0:23:13 > 0:23:18Debt management companies have sprung up offering to sort out your finances
0:23:18 > 0:23:21if you're having trouble keeping up the repayments on any loans.
0:23:21 > 0:23:23But things don't always go to plan,
0:23:23 > 0:23:27and you've been telling us about one company in particular that's
0:23:27 > 0:23:30left some of you in a worse position than when you started.
0:23:32 > 0:23:35Angie Proudly was struggling to manage more
0:23:35 > 0:23:38than £10,000 worth of debt, when,
0:23:38 > 0:23:42out of the blue, a company called One Debt Solution rang offering to help.
0:23:44 > 0:23:47They said not only would they be able to arrange affordable monthly
0:23:47 > 0:23:52payments, but they could maybe even get some of the debt written off.
0:23:52 > 0:23:56They seemed very caring, very understanding, made me
0:23:56 > 0:23:59feel really at ease.
0:23:59 > 0:24:01I thought, "This is brilliant," you know?
0:24:01 > 0:24:03What more could anybody ask for?
0:24:03 > 0:24:05Somebody that's going to help me
0:24:05 > 0:24:07get out of a horrible situation that I'm in.
0:24:07 > 0:24:12The company paperwork said One Debt Solution aims to clear your
0:24:12 > 0:24:14debts within five years.
0:24:14 > 0:24:18So, in August 2010, Angie signed up to a payment plan,
0:24:18 > 0:24:22arranging to pay £135 a month to the company.
0:24:22 > 0:24:26And although 15% of this, just over £20 a month,
0:24:26 > 0:24:29covered the company's regular admin fees and charges,
0:24:29 > 0:24:33Angie felt confident that a large chunk of her monthly payment
0:24:33 > 0:24:35would go towards paying off the debt.
0:24:35 > 0:24:37I felt really happy that...
0:24:40 > 0:24:42..that had been taken out my hands.
0:24:42 > 0:24:44Somebody was going to deal with it for me,
0:24:44 > 0:24:46and put me back on the right track.
0:24:48 > 0:24:51The promises made in paperwork were really clear.
0:24:51 > 0:24:54The company would stop any interest
0:24:54 > 0:24:56and penalty charges being added to the debt,
0:24:56 > 0:25:01pay Angie's creditors every month and send a monthly statement.
0:25:01 > 0:25:04But three months into the contract, Angie realised that
0:25:04 > 0:25:07One Debt Solution hadn't sent her any statements,
0:25:07 > 0:25:09so she called them for an update.
0:25:09 > 0:25:13All I wanted, basically, was to get a statement of...
0:25:15 > 0:25:17A breakdown of what had been paid to my creditors
0:25:17 > 0:25:23and a balance of how things were going.
0:25:23 > 0:25:25But Angie got no response.
0:25:25 > 0:25:27On top of that, she was still receiving
0:25:27 > 0:25:31demands for payments from her creditors, which made her worry that
0:25:31 > 0:25:35the money that she was paying One Debt Solution wasn't being passed on.
0:25:35 > 0:25:38Angie couldn't understand what was going on.
0:25:38 > 0:25:39Ten months after signing up,
0:25:39 > 0:25:45she had paid One Debt Solution over £1,300, but she hadn't received a
0:25:45 > 0:25:49single statement to prove any of that money had made it to her creditors.
0:25:49 > 0:25:53Worse still, one of the creditors was now threatening legal action.
0:25:55 > 0:25:59I spent a lot of time crying on friends',
0:25:59 > 0:26:03family's shoulders because I just didn't know which way to turn.
0:26:03 > 0:26:07Unsure where her payments were going, Angie decided to end the contact,
0:26:07 > 0:26:11and in June 2011, requested a full refund.
0:26:11 > 0:26:16£135 a month, to me, is a lot of money.
0:26:16 > 0:26:21To pay out that money to a company and not have anything done...
0:26:24 > 0:26:26Well, words fail me.
0:26:26 > 0:26:28They really do.
0:26:28 > 0:26:30But the company didn't give her the money back,
0:26:30 > 0:26:34so Angie made a formal complaint to the Financial Ombudsman Service.
0:26:34 > 0:26:36And when they investigated,
0:26:36 > 0:26:41it turned out that of the £1,350 she had paid to One Debt Solution,
0:26:41 > 0:26:44just £9.50 had been passed to her creditors -
0:26:44 > 0:26:47not even remotely what had been agreed.
0:26:47 > 0:26:51The Ombudsman said Angie should be refunded in full, with interest
0:26:51 > 0:26:52and compensation.
0:26:52 > 0:26:58All the stress that I had from this company put me on a real low ebb.
0:26:58 > 0:27:02I just wish I'd never introduced them in my life at the beginning.
0:27:02 > 0:27:06When we contacted One Debt Solution, the company told us that it
0:27:06 > 0:27:09accepted the Ombudsman's decision, and agrees that...
0:27:14 > 0:27:16It added, this case...
0:27:19 > 0:27:20..and said it had...
0:27:21 > 0:27:26However, Angie says she has not yet had back the full amount.
0:27:26 > 0:27:30Sadly, Angie's experience with One Debt Solution is not unique.
0:27:30 > 0:27:34We've been contacted by 15 other Rip Off Britain viewers with
0:27:34 > 0:27:36similar stories.
0:27:36 > 0:27:39Among them, former soldier Nick Idiols from Kent.
0:27:39 > 0:27:42He left the army in 2008 to become a full-time father.
0:27:42 > 0:27:45Determined to get on top of his mounting debts,
0:27:45 > 0:27:49he too turned to One Debt Solution.
0:27:49 > 0:27:52I thought, finally, about time, my debts would be cleared,
0:27:52 > 0:27:54I can get on with my life.
0:27:54 > 0:27:58So I was excited about the prospect of, five years from now, I'm going to be debt free
0:27:58 > 0:28:01and working towards my dream of actually owning a house.
0:28:01 > 0:28:06In June 2011, Nick started to pay One Debt Solution £100 a month to
0:28:06 > 0:28:08manage his debts.
0:28:08 > 0:28:11The company was supposed to be paying each creditor a token amount
0:28:11 > 0:28:15while they established if any of these debts could be written off.
0:28:15 > 0:28:18But Nick had no idea whether they were actually doing it or not.
0:28:18 > 0:28:21There was no proof, I had no correspondence...
0:28:21 > 0:28:23where my money's going.
0:28:23 > 0:28:26When we checked, every one of Nick's creditors told us they hadn't
0:28:26 > 0:28:30received any of the payments from One Debt Solution they were supposed to.
0:28:30 > 0:28:33But Nick says he had no idea of that
0:28:33 > 0:28:36because they were ignoring his requests for information.
0:28:36 > 0:28:38Basically, they were just unresponsive.
0:28:38 > 0:28:41They weren't telling me what was happening and before I knew it,
0:28:41 > 0:28:43I'd paid a whole year's worth of money for nothing.
0:28:43 > 0:28:47Just like Angie, Nick kept being chased for money by creditors
0:28:47 > 0:28:49he was supposedly paying One Debt Solution to manage.
0:28:49 > 0:28:51And with his financial problems getting no better,
0:28:51 > 0:28:55resulting in him missing a couple of months' payments, in July 2012,
0:28:55 > 0:28:59he decided to close his account and ask for a refund.
0:28:59 > 0:29:04Instead, the company offered him £350 of the £880 he'd paid them,
0:29:04 > 0:29:07which, thinking it was better than nothing, he accepted.
0:29:07 > 0:29:10I understand that I made mistakes when I was younger.
0:29:10 > 0:29:13I got these debts, I got myself in this problem, but then I turned
0:29:13 > 0:29:18to a company in question that made promises to change that for me.
0:29:18 > 0:29:20All I want is to one day get on my feet,
0:29:20 > 0:29:25get a mortgage of my own, have a home and provide for my children.
0:29:25 > 0:29:29One Debt Solution insists it did send Nick monthly statements and that it
0:29:29 > 0:29:33was Nick's failed payments that delayed progress with his account.
0:29:33 > 0:29:35The company says by the time he cancelled,
0:29:35 > 0:29:38they were negotiating offers of repayment with his creditors.
0:29:38 > 0:29:39But...
0:29:44 > 0:29:47And the absence of Nick doing so meant it was...
0:29:50 > 0:29:53One Debt Solution also told us it can demonstrate....
0:29:59 > 0:30:02But Nick would still like all of his money back.
0:30:02 > 0:30:06So, he's on his way to the Financial Ombudsman Service to find out
0:30:06 > 0:30:09if there's anything more he can do.
0:30:09 > 0:30:12Any business has eight weeks to sort out a complaint,
0:30:12 > 0:30:14and if it can't sort out your complaint within that time,
0:30:14 > 0:30:16then you can automatically come to the Ombudsman
0:30:16 > 0:30:19and we can help you sort it out for free.
0:30:19 > 0:30:23In 2012, the Ombudsman investigated around 600 complaints
0:30:23 > 0:30:26about various debt management companies.
0:30:26 > 0:30:29In over half of those cases, they found in favour of the consumer,
0:30:29 > 0:30:33so Nick's hoping they can help him resolve his case too.
0:30:33 > 0:30:36The Ombudsman can also provide free information to anyone
0:30:36 > 0:30:38struggling with debt.
0:30:38 > 0:30:40So, chances are you may not even need
0:30:40 > 0:30:43the help of a debt management company at all.
0:30:43 > 0:30:47Back in Southampton, Angie is also looking for further help.
0:30:47 > 0:30:51As One Debt Solution did nothing to sort out her finances,
0:30:51 > 0:30:53she's still wrestling with a £10,000 debt.
0:30:57 > 0:30:59Thank you for coming today.
0:30:59 > 0:31:02She's come to her local Citizens Advice Bureau where she's delighted
0:31:02 > 0:31:06to learn that rather than pay a company to manage your finances,
0:31:06 > 0:31:10there are several organisations who can try and help for free.
0:31:10 > 0:31:15People sometimes panic and look on the internet, and they rush
0:31:15 > 0:31:19into a debt management plan, and it might not be the best option.
0:31:19 > 0:31:20There is a best way forward
0:31:20 > 0:31:23and it might not be the debt management plan.
0:31:23 > 0:31:25For Angie, knowing there are other places she can turn to
0:31:25 > 0:31:28is very good news indeed.
0:31:28 > 0:31:31Just really pleased that, you know, I've got the booklet now
0:31:31 > 0:31:35to hopefully be able to get on with my life and get it sorted.
0:31:35 > 0:31:39I feel optimistic about the future now.
0:31:39 > 0:31:42Details of the organisations who offer free debt advice
0:31:42 > 0:31:43are on our website.
0:31:47 > 0:31:51..where you'll also find other tips on how to better manage your money.
0:31:53 > 0:31:56Now, as you know, the payday loan industry has no shortage of critics,
0:31:56 > 0:31:59and in the summer, the Archbishop of Canterbury
0:31:59 > 0:32:03joined in as well, with a vow to compete them out of existence.
0:32:03 > 0:32:04So what exactly did he mean?
0:32:04 > 0:32:07And if you're desperate for a loan, what is the alternative?
0:32:10 > 0:32:14Where do you go if you need cash fast and your bank can't help?
0:32:14 > 0:32:18Well, it's estimated that over seven and a half million new payday loans
0:32:18 > 0:32:22were taken out between 2011 and 2012.
0:32:22 > 0:32:26For many, it's a quick solution to their money worries.
0:32:26 > 0:32:28But with eye-wateringly high interest rates,
0:32:28 > 0:32:31they have recently come under fire from some very high places.
0:32:35 > 0:32:38It's an industry that Alison is familiar with.
0:32:38 > 0:32:41When she needed money quickly to pay for bills,
0:32:41 > 0:32:44she found herself having to borrow from doorstep lenders.
0:32:44 > 0:32:48I started using them when my daughter was six months old,
0:32:48 > 0:32:52my first child. I moved into my first council property.
0:32:52 > 0:32:55I had a maximum of seven days to move in
0:32:55 > 0:33:00before I had to start paying them. The banks aren't going to lend you.
0:33:00 > 0:33:05Erm... You've got to get it from somewhere.
0:33:05 > 0:33:09In the past, probably used them 30-40 times.
0:33:09 > 0:33:12But whilst they solved her problems in the short term,
0:33:12 > 0:33:15it soon proved tricky for Alison to keep up with
0:33:15 > 0:33:19the repayments on all her debts, and the interest on them as well.
0:33:19 > 0:33:21It's a hole you get stuck in.
0:33:21 > 0:33:24You're going round in circles and you can't pay 'em,
0:33:24 > 0:33:29you can't find the money, so the only thing is you think,
0:33:29 > 0:33:32"If I leave it, it'll go away," and it doesn't go away.
0:33:32 > 0:33:35You just end up paying a lot more back.
0:33:35 > 0:33:38But then salvation came from an unexpected source.
0:33:42 > 0:33:45Peta Hill runs a sub branch of Lincolnshire Credit Union
0:33:45 > 0:33:49from Alison's local church and has seen first hand the pressures
0:33:49 > 0:33:51people in the community are facing.
0:33:51 > 0:33:54I think one of the real issues is that people don't know where to go.
0:33:54 > 0:33:56They don't know what else is available
0:33:56 > 0:34:02and a payday loan or a doorstep lender is quick, it's easy access,
0:34:02 > 0:34:06and in terms of a crisis, people think, "What can we do quickly?"
0:34:06 > 0:34:09We know that people know that they are letting themselves
0:34:09 > 0:34:12into that cycle, but we also know from things that people have told us
0:34:12 > 0:34:15that they don't know how to get out of that.
0:34:15 > 0:34:18Peta soon realised that the community needed other options
0:34:18 > 0:34:20to help get them out of debt.
0:34:20 > 0:34:23It pulls people into the cycle of debt,
0:34:23 > 0:34:27whereas credit union helps people get out of the cycle of debt.
0:34:27 > 0:34:30With a doorstep lender, it's very easy to borrow some money,
0:34:30 > 0:34:32not to be able to pay off the loan, and then be encouraged to
0:34:32 > 0:34:35have another loan to pay off the initial loan.
0:34:35 > 0:34:39So, that cycle spirals out of control,
0:34:39 > 0:34:41and we have seen that in this community.
0:34:41 > 0:34:44This credit union works like many other lenders
0:34:44 > 0:34:46in the sense that if you need to borrow money,
0:34:46 > 0:34:48they will check you can afford to pay it back,
0:34:48 > 0:34:52but where it differs is that the interest rates are very low,
0:34:52 > 0:34:54at this branch just 1% a month,
0:34:54 > 0:34:57and therefore should be much more manageable.
0:34:57 > 0:35:00There are several churches in Lincolnshire that have got involved
0:35:00 > 0:35:01with credit union.
0:35:01 > 0:35:04We've done extremely well, we've been running for about two years.
0:35:04 > 0:35:08We have got investments of £80,000 from the local community,
0:35:08 > 0:35:11which shows that the local community wants to support that.
0:35:11 > 0:35:15One of the concerns for credit unions generally is that
0:35:15 > 0:35:18some of their loans are high-risk loans,
0:35:18 > 0:35:21so how can they maintain their sustainability?
0:35:21 > 0:35:23How can they keep that up?
0:35:23 > 0:35:26One of the things that we try to encourage is people, when
0:35:26 > 0:35:29they're paying back their loan, that they will save even a pound a week
0:35:29 > 0:35:33or a pound a month, so that when they have a crisis another time,
0:35:33 > 0:35:36actually they have a little bit already to help them.
0:35:36 > 0:35:40Such low interest rates have been a lifeline for Alison.
0:35:40 > 0:35:45I filled the form out and the first ever loan I got off them were £150.
0:35:46 > 0:35:50I was so shocked at the interest. A penny to the pound.
0:35:50 > 0:35:52They explain it to you.
0:35:52 > 0:35:55It's all written down, there's no small print.
0:35:55 > 0:35:59It's all there in black and white, whereas a doorstep lender,
0:35:59 > 0:36:01they'll say, "Sign there."
0:36:01 > 0:36:04The credit union here is one of around 400 across the country,
0:36:04 > 0:36:07and there are plans to set up more.
0:36:07 > 0:36:09In April this year, the government announced an investment
0:36:09 > 0:36:13of £38 million to expand the credit union sector
0:36:13 > 0:36:16and help up to one million more people in the process
0:36:16 > 0:36:19by giving them access to banking products, debt advice
0:36:19 > 0:36:21and affordable loans.
0:36:21 > 0:36:24On top of that, the Archbishop of Canterbury has announced that
0:36:24 > 0:36:27the Church of England is backing church credit unions
0:36:27 > 0:36:29to compete directly with payday lenders.
0:36:29 > 0:36:32We think you can probably do it for about an equivalent annual rate
0:36:32 > 0:36:36of about 70 or 80%. It's better than 5,500%.
0:36:38 > 0:36:40Staff and volunteers back at the Lincolnshire Credit Union
0:36:40 > 0:36:44are all too aware of the importance of continuing to offer
0:36:44 > 0:36:47an alternative to payday loans for the local community.
0:36:47 > 0:36:51We all have the same aim, which is to help people,
0:36:51 > 0:36:55particularly in these difficult times when they're faced with benefit cuts,
0:36:55 > 0:36:58possibly changes to the way benefits are paid.
0:36:58 > 0:37:01Those people, in my experience,
0:37:01 > 0:37:04don't necessarily have the skills that they need to actually manage
0:37:04 > 0:37:08that budget, and I think that's where we and other organisations
0:37:08 > 0:37:10have a role to play.
0:37:10 > 0:37:13We just don't want people falling through the cracks.
0:37:13 > 0:37:17And we believe that we've got a really big role to play
0:37:17 > 0:37:21in the future, but we need the support of the whole community.
0:37:23 > 0:37:25Nice to see you this morning. Bye! Thank you.
0:37:30 > 0:37:32Sometimes when you feel ripped off,
0:37:32 > 0:37:34it could be you that's made a mistake.
0:37:34 > 0:37:38Perhaps you didn't read the small print, or realise the consequences
0:37:38 > 0:37:39of what you've signed up to.
0:37:39 > 0:37:41Whoever's at fault, when things go wrong,
0:37:41 > 0:37:44you need to know what to do about it.
0:37:44 > 0:37:47So, we've put together an online booklet of tips and advice.
0:37:47 > 0:37:50You can find a link to download the free guide on our website...
0:37:54 > 0:37:57Or for a hard copy, send a stamped A5 envelope
0:37:57 > 0:38:00to the address which we'll give at the end of the programme.
0:38:04 > 0:38:07Payday loans have become an increasingly popular way
0:38:07 > 0:38:09of accessing cash.
0:38:09 > 0:38:13Last year, borrowers took out £2 billion worth of loans,
0:38:13 > 0:38:16but do they always know what they're getting into?
0:38:16 > 0:38:17They're asking for more interest.
0:38:17 > 0:38:20They keep putting money on when I've already paid it.
0:38:20 > 0:38:24The interest they charge on these payday loans is astronomical.
0:38:24 > 0:38:26A lot of people don't realise and it's an easy fix for people.
0:38:27 > 0:38:32Last year, debt charity Step Change reported a 30% increase
0:38:32 > 0:38:35in calls from people struggling to deal with debt from payday loans.
0:38:35 > 0:38:38So we asked financial expert Michael Ossei
0:38:38 > 0:38:42to help unravel the language of the lenders.
0:38:42 > 0:38:44These loan companies, short-term loan companies,
0:38:44 > 0:38:46are very much like the modern day highway men.
0:38:46 > 0:38:49What we have is financial crisis. People need money.
0:38:49 > 0:38:50They need instant cash.
0:38:50 > 0:38:52And what's happened is that these companies have come in
0:38:52 > 0:38:54and are actually offering a service,
0:38:54 > 0:38:56but not being totally transparent to the consumer.
0:38:56 > 0:38:59And while some payday lenders do follow the rules,
0:38:59 > 0:39:02others have been accused of advertising their services
0:39:02 > 0:39:06with simple-sounding maths that in fact disguise huge interest rates.
0:39:06 > 0:39:08Michael gave us an example.
0:39:08 > 0:39:10To start off with
0:39:10 > 0:39:15there is the fee. Every £100 you take out, they charge you up to £30.
0:39:15 > 0:39:19So imagine you take out £200. It's cost you £60 already.
0:39:19 > 0:39:22So at the end of the month, you need to pay £60.
0:39:22 > 0:39:23That might not seem too bad
0:39:23 > 0:39:27if you can pay back the whole amount on time and walk away.
0:39:27 > 0:39:30But miss a payment, and you can quickly find yourself owing
0:39:30 > 0:39:34a lot more than the £200 you first borrowed.
0:39:34 > 0:39:37If you were to miss your payments by three days,
0:39:37 > 0:39:40you're looking now at almost £71 worth of interest
0:39:40 > 0:39:43that you now have to pay on top of your loan.
0:39:43 > 0:39:45Now that is a lot of money.
0:39:45 > 0:39:46And if you can't pay the loan back,
0:39:46 > 0:39:49penalty charges can turn your small short-term loan
0:39:49 > 0:39:53into a much bigger long-term burden.
0:39:53 > 0:39:56I got one. £225.
0:39:56 > 0:39:58They wanted £225 back.
0:39:58 > 0:40:01Now they're charging me £30 a day to pay it back.
0:40:01 > 0:40:04If I borrowed £50, I have to pay 64 back.
0:40:04 > 0:40:07Now I'm in debt of over nearly five grand.
0:40:07 > 0:40:09And of course missing payments on any loan
0:40:09 > 0:40:12can have serious implications for your future.
0:40:12 > 0:40:15Every time you take out one of these loans,
0:40:15 > 0:40:16it's going to go on your credit file,
0:40:16 > 0:40:19and your credit file is going to be with you for life.
0:40:19 > 0:40:22So if you do mess up, you wouldn't be able to get a mortgage,
0:40:22 > 0:40:24you wouldn't be able to get a standard loan.
0:40:24 > 0:40:27If you are thinking of taking out a payday loan,
0:40:27 > 0:40:30Michael has some key advice to keep in mind.
0:40:30 > 0:40:33If you are ever in a position where you need to get a short-term loan,
0:40:33 > 0:40:35look at how much it costs.
0:40:35 > 0:40:39A lot of these loan companies will tell you it's £30 for every 100.
0:40:39 > 0:40:40Make sure you're aware of that.
0:40:40 > 0:40:42Make sure that there are no fees,
0:40:42 > 0:40:46find out how much they will charge you if you miss a payment.
0:40:46 > 0:40:50And remember, there are alternatives to payday lenders,
0:40:50 > 0:40:53such as credit unions, which, as we heard earlier in the programme,
0:40:53 > 0:40:55won't charge the same sort of rates.
0:40:55 > 0:40:58You can find further details, along with more advice on loans
0:40:58 > 0:41:00and borrowing, on our website.
0:41:10 > 0:41:15Here at Rip Off Britain we're always keen to hear more of your stories,
0:41:15 > 0:41:18and we're particularly interested in ones to do with food
0:41:18 > 0:41:21for a new series for next year.
0:41:21 > 0:41:25Confused by all those different labels on supermarket shelves?
0:41:25 > 0:41:29Worried that products described as healthy may be nothing of the kind?
0:41:29 > 0:41:32Whatever's worrying you about the things that we put on our plates,
0:41:32 > 0:41:34you can write to us at...
0:41:44 > 0:41:46Or you can always send us an e-mail.
0:41:50 > 0:41:54The Rip Off team is ready and waiting to investigate your stories.
0:41:57 > 0:42:01Now, we're told that the UK economy is slowly on the mend,
0:42:01 > 0:42:05but an awful lot of people are still facing very tough times.
0:42:05 > 0:42:06And, as we've heard,
0:42:06 > 0:42:10while there are plenty of companies who say that they can help you out
0:42:10 > 0:42:14either by lending you cash fast or even sorting out your finances,
0:42:14 > 0:42:17if you're not careful, some of them can just end up
0:42:17 > 0:42:20creating even more problems.
0:42:20 > 0:42:22Well, we'll have to wait and see what happens
0:42:22 > 0:42:24with some of those payday loan companies.
0:42:24 > 0:42:28But any industry that manages to end up with the Office of Fair Trading,
0:42:28 > 0:42:32the Archbishop of Canterbury and people like us on its case,
0:42:32 > 0:42:35probably does need to sit up and take notice. I'll say!
0:42:35 > 0:42:37It certainly is a formidable combination.
0:42:37 > 0:42:40But on that point, that's all we've got time for today.
0:42:40 > 0:42:43You can always find plenty of financial advice on our website.
0:42:46 > 0:42:49And we'll be back very soon to investigate more of your stories.
0:42:49 > 0:42:52But until then, thanks for your company, and from all of us,
0:42:52 > 0:42:53bye-bye. Bye-bye. Bye.
0:42:53 > 0:42:56Subtitles by Red Bee Media Ltd