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OFT bans and fines payday lender over £500k

The Office of Fair Trading has fined a payday lender over £500,000 and revoked its credit licence for failing to carry out proper identity checks on loan applicants and breaching money laundering rules.

Online payday lender MCO Capital has been fined £544,505 after fraudsters used the personal details of over 7,000 consumers to successfully apply for loans worth millions of pounds.

The OFT found MCO had also acted unfairly by demanding loans to be repaid when it was aware those people may not have taken out the loans.

MCO ignored the OFT’s requests to stop this practice. It was also found to lack the necessary skills, knowledge and experience to run a consumer credit business.

MCO can appeal the OFT’s decision.

OFT director of credit David Fisher says: “MCO’s failure to put adequate procedures in place made it vulnerable to fraud. The way in which MCO then wrote to consumers to collect debts caused unnecessary distress and inconvenience to thousands of people.

“This financial penalty sends out a strong message that businesses lending to consumers must have adequate anti-money laundering procedures in place.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. This was an accident waiting to happen. When will the regulatory authorities clamp down on these companies, stop their nefarious advertising practices and protect some of the most vulnerable in our society?

  2. I have been victim to 3 payday loan frauds personally, via Wonga.com. In spite of complaints to trace the source of this matter, I have been met by a wave of smoke and mirrors. The OFT said they could not deal with complaints from individuals (?) and the finance and leasing association (I think it was) never even responded to my e-mail.

    Maybe Wonga are just a bit too big a player for the OFT and their ‘strong message.’

    I have no doubts that this is a wider scale practice than is being let on!

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