How Smart Lending Dumbed Down

TechCrunch

Editor’s note: Julia Kukiewicz edits UK-based Choose.net, a price comparison service that provides guides, product reviews and comparison tables for consumers.

Between 2008 and 2010, Wonga was doing something mind-bendingly stupid: sending letters from fake law firms to borrowers behind on their loans. It sounds like a bad office prank.

They even took the firm names from apparently still current employees — except when you consider that they did it 45,000 times and that it will cost them £2.25 million to give each injured party just £50 in compensation, as they were ordered to a few weeks ago. It may even land them in court.

Wonga wasn’t alone in sending faux-legal threats; in the past few weeks it’s emerged that many big lenders and the Student Loans Company (SLC) have using similar tactics for years, but the payday lender was the only one to create their law firm out of thin air. In…

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