As the recession bites, the vultures circle ever closer. Some offering easy solutions to cash starved people in a variety of ways and others touting “sound” investments. Are people really this gullible? I can’t help feeling that this is either some failure of education or of a general lack of common sense; I really couldn’t imagine any of these businesses flourishing 20 or 30 years ago.
What all the following operations seem to have in common is a basic lack of moral decency when dealing with the less fortunate. Anyone, it seems, is fair game. I really hope that in some small way writing about these callous scavengers on the internet may prevent at least one unfortunate falling victim to them.
Need a short term loan until pay day? Don’t use Wonga (no links to any of these lice here) The sponsors of Blackpool FC spend additional thousands finding mug punters to
lend up to £400 to for short periods, at mind blowing rates of interest. From their own web site:
Amount of credit £207 for 20 days
Total amount payable £254.42
Interest rate 360% pa (fixed)
Transmission fee £5.50
Representative APR 4214%
Yes, thats Four Thousand, Two hundred and fourteen percent !!
Advice from the Government’s own web site regarding Dealing with loan sharks:
The best advice for dealing with loan sharks is ‘don’t’. They’re unlicensed moneylenders who charge very high interest rates and sometimes use threats and violence to frighten
people who can’t pay back their loan.
What is a loan shark?
A loan shark is an unlicensed moneylender. Licensed moneylenders are regulated by the Office of Fair Trading (OFT) and must follow the OFT’s codes of practice.
Because they’re not licensed, loan sharks operate outside the law. If you borrow from them it’s likely you’ll:
* get a loan on very bad terms
* pay an extortionate rate of interest
* be harassed if you get behind with your repayments
* be pressured into borrowing more from them to repay one debt with another
Well Wonga seem to press most of those buttons, why are they licensed by the OFT?
If you know anyone who is considering using them, then suggest they ask for a loan from
anyone, their employer, a relative, their credit card rather than use these leeches. Alternatively encourage them to cut down on everything , sell stuff otherwise they could end up needing the services of a bigger vulture – the Debt Management company.
These companies also advertise heavily on local radio,TV and pay per click advertising on the internet. Some of them even pass themselves off as government organisations ( The only one is National Debt Line ) with similar layouts and names. They all offer services that can be undertaken by an enterprising individual on his own or the citizens advice bureau but with a difference, they want serious fees in advance and on an ongoing monthly basis . Furthermore, they are more than happy to take heavily indebted people into IVA’s or Bankruptcy as that earns more money with as much as a third again of the debt being charged as fees.
The OFT also license these vultures but also tries to keep them in check:
The Office of Fair Trading (OFT) has announced that, following an investigation, some 35 debt management companies have lost their Consumer Credit licenses.
In September 2010, OFT issued a warning to 129 such companies after uncovering issues with compliance. On January 31st, 35 of these have surrendered their licenses while 79 are currently undergoing investigation and a further eight have been informed that their licenses are shortly to be revoked.
How bad must they have been ??
“What am I to do? ” thinks the cash strapped punter. I know, I will sell my car and start using the bus. There are some nice people advertising on TV with a catchy tune : Webuyanycar.com. Sounds a bit too good to be true – I will check out their web site, oooh look , they actually give you a price straightaway after entering a few details and your registration number. Thats not a bad price , I will have some of that and then I wont have to pay 4214% on my Wonga loan.
What they don’t know is the final step of Wearecompletetwats insidious business model. After accepting the generous price on the site and following the helpful instructions to take their wheels down to one of their centres, they are subjected to a cynical process of price reduction. Wescrewanyprice’s staff at these centres are targetted and trained by their management to reduce the offer price as much as possible so that they can make a tidy profit on the motor when they send it straight to auction.
Tried and tested methods for reducing the offer price include: lack of service records, lack of main dealer service records, any innaccuracies in the original description however small, not having two sets of original keys, poor spare tyre, small chips and dents, no handbooks and thousands of other reasons perhaps including no activity centre for cats or insufficent space in boot for carrying ocean going liners.( OK , I made those two up )
Wetakeyourmoneyandcar.com is owned by the same people who brought you CarCraft, famous for outstandingly good value used cars.
What about selling something else? I shall parcel up the contents of Granny’s jewelry box and send it off to one of these nice Postal gold companies that advertise so often. Bad decision again:
The Office Of Fair Trading have ordered three such companies to improve their customer service following an investigation of the gold-buying-by-post industry. CashMyGold, Cash4Gold and Postal Gold have agreed to smarten up their act as a result.
The OFT found that companies were paying out on gold that customers had sent in for evaluation and leaving too short a period for the payment to be returned if the customerdecided to reject the offer. In many cases, the gold was melted down before the customer had a chance to consider the offer and reject it.
Research by Which! showed that some postal gold companies offered an average of just 6% of the gold’s retail value, compared with an average of 25% offered by pawnbrokers and high street jewellers.
For those looking for a sound investment as opposed to increasing personal liquidity, we have another marvellous example of a vulture company. The London Mint Office, a coin marketing company. This type of vulture has been around for some years. It’s modus operandi is to tempt people in with a spurious offer at a very low price and then begin sending them further coins at a much higher price and making it very difficult from a practical point of view to cancel their”arrangment” The latest one involves a televison advert promising to “Help the Heroes” by buying the 24 carat gold ” Lone Soldier Coin” for only £1. All of which, of course, will be donated to Help the Heroes Charities.
The London Mint Office are an object lesson in dodgy marketing; the offical sounding name, the solemn voice over on the advert, the appeal to people’s better nature, the use of weasel words, obfuscation and an outstanding ability to hide behind the “Small Print”.
Finally , if it wasn’t criminal it would actually be funny. Recession hit punters looking to cheer themselves up paid £30 a head to two brothers for tickets to a Lapland Christmas Fantasy that, shall we say, was not all it was cracked up to be. Read this Daily Telegraph article and watch the video.