VULNERABLE FALLING PREY TO LOAN SHARKS.
"DESPICABLE and predatory" loan sharks operating in Wales are charging vulnerable victims interest of up to 131,000% APR, a team of investigators responsible for clamping down on rogue money lenders has revealed.
Wales' Illegal Money Lending Unit (WIMLU) has pinpointed PS2.3m of illegal debt since it was set up five years ago - but those in charge have warned that unscrupulous loan sharks still blight many Welsh communities.
One victim told Wales on Sunday she had been left suicidal after being forced to pay back thousands - for borrowing just PS250.
WIMLU is responsible for investigating and prosecuting loan sharks, as well as supporting victims when their debts become too much.
Set up in November 2007 from its base with Cardiff council, in the last five years the unit has identified 161 illegal money lenders in Wales with more than 1,800 victims.
Investigators have managed to get PS923,280 of debt written off and brought court proceedings against 33 loans sharks. But despite their hard work, it is thought these figures are just the tip of the iceberg of the full extent of the problem in Wales.
They often prey on the most vulnerable and as the festive season gets under way, WIMLU - whose staff cannot be identified for their own safety - has warned people to be on their guard against loan sharks.
WIMLU's investigations manager said: "Our message is do not go to a loan shark. You may feel that this person is your friend, or the easiest solution to funding your gifts and Christmas, but in the long run, it turns out to be the worst thing you could do.
"If you have already done it, you have not done anything wrong.
"We are here to help and support you as best we can and get you out of the situation you have found yourself in."
An illegal money lender, or loan shark, is anyone who runs a money lending business without a licence from the Office of Fair Trading, and lending money without a licence is a crime.
WIMLU's officers described how lenders often come across as friendly at first, offering to lend cash to help pay utility bills, rent, buy food, or pay off other debts. But the lender will usually offer little or no paperwork to support the loan - or if they do, they may fill it in for their unsuspecting victims or refuse to provide copies.
Once the repayments begin, it is common for loan sharks not to tell their victims the interest rate, when the payments will end or even how much they still owe.
This has led to the unit discovering some staggering rates of interest on loans.
A typical case saw one victim borrow PS350 from a loan shark.
She repaid PS30 a week for a year, making a total repayment of PS1,560 and an APR of 5,682.8%.
The highest rate ever seen in Wales was a massive 131,000% APR.
Inevitably, loan shark victims struggle to keep up with their repayments and the lender's initial friendly manner turns nasty.
Some lenders have been known to take a victim's passport, driving licence, benefits and bank cards as security for the loan and many begin to make their victims feel threatened or intimidated.
Some even become violent towards their victims, leaving them terrified.
WIMLU'S investigations manager said: "Loan sharks are not a community service - they are a blight on our communities.
They operate using the most despicable methods and have a hugely detrimental effect on the quality of life for victims. One judge described the offence of loan sharking as 'murder of the soul' which summarises the misery they can cause."
One South Wales victim who spoke to Wales On Sunday described the horrendous experience she went through after borrowing PS250 from her landlord for a deposit on a one-bedroom flat in May 2008. Charlotte Brown*, a 48-year-old mother-of-eight, is still unsure exactly how much she paid back, but believes she paid her loan shark hundreds more than she owed, following constant threats and intimidation, and built up an outstanding debt that the shark put at PS2,000.
The situation left her feeling so depressed, that at one point she even considered taking her own life.
She described how she was initially told to pay back the PS250 loan at a rate of PS20 every fortnight, while her weekly rent was to be her housing benefit, plus another PS20 on top.
But within a few weeks, the lender told Charlotte that the deposit on her flat had increased by another PS150.
She said: "The amount he asked for seemed to change every week.
"By September that year, I thought I had paid the bond off but the lender tried to get more off me. By now, he was adding amounts which he said were rent arrears, but I did not owe any rent arrears.
"He was very controlling in his way of dealing with tenants and would know the day my [housing] benefit was due and insist that it was paid [to him] straight away, even to the point where he would take me to a cash checking service to cash my Giro just so I could pay him.
"That, together with what he wanted in rent, made me very short each week, with virtually no money to live on.
"He would even intercept the postman and get the Giros for me and other people, then take us in a minibus to cash them."
Charlotte said that at one point, she was contacted by her local housing benefit office to say the landlord had told them she could not read or write and requested that the housing benefit be paid directly to him. This request was refused. At the beginning of October 2008 - by which time it is thought Charlotte had paid out more than PS600 - Charlotte was asked to leave her flat by her landlord, but with no money left, she had nowhere to go and hit rock bottom.
"At one point, I had no idea what to do and I was so scared, I even thought about taking my own life," she said.
Luckily, Charlotte contacted her local council, who rehoused her and put her in touch with WIMLU.
Her debts were written off and thanks to a WIMLU investigation, Charlotte's lender was eventually convicted of illegal money lending and benefit fraud and served prison time.
Charlotte never got her deposit back and it has taken her a long time to regain her confidence and rebuild her life, but she said she hoped that by telling her story other people would go to WIMLU for help.
She said: "Just ask for help.
You have not done anything wrong and you don't have to deal with it on your own." * Name changed to protect anonymity TOP THINGS THAT THE MONEY LOANED IS USED TO PAY FOR | 1. Pay off other debts.
| 2. Utility bills, or food and living provisions. | 3.washing machines, fridges and freezers.
3. Rent. | 4. White goods such as | 5. Christmas and birthdays. | 6. Food and living provisions. | Useful numbers | WIMLU's 24 hour hotline number: 0300 123 3311. | National Debt line: 0808 808 4000.
Citizens Advice Bureau (CAB): 0844 77 2020. | Shelter Cymru: 0845 075 5005.
For information on credit unions, visit www.wales.gov.uk/creditunions TOP 10 REASONS WHY PEOPLE DO NOT REPORT A LOAN SHARK | 1. Don't know how or who to report the loan shark to.
2. Believe the shark is a "friend".
3. Fear of violence against them or their family.
4. Embarrassment. | 5. Believe they have broken the law by borrowing from the shark.
6. The shark is providing them with money that they want/need - necessity - only source of credit.
7. Believe the shark is lending at a reasonable interest rate.
8. Assume the shark is a licensed lender.
9. Acceptable form of finance within the community. | 10. Shark is part of the community.
Investigators from Wales' Illegal Money Lending Unit have identified 161 illegal money lenders in Wales with more than 1,800 victims - but they say that is just the tip of the iceberg