Wonga is the company which became very successful very quickly for making borrowing short term loans straightforward for consumers. Following an investigation by the Financial Conduct Authority the company now has the following on its website:
'Important customer announcement - We are sorry
Further to the Financial Conduct Authority's announcement we apologise unreservedly to customers affected by the historic debt collection issue and certain system errors.'
Wonga explains its problems as follows:
'Historical debt collection issues
Between 2008 and 2010, we sent out letters to 44,556 customers claiming to be from companies "Barker & Lowe" and "Chainey, D'Amato & Shannon". These letters were in fact from Wonga. They gave the misleading impression that customers' outstanding debts had been passed on to a law firm (or other third party) with the threat of adverse consequences if the debts were not repaid quickly. Charges were added to some customer accounts as a result of this practice.
This practice was unacceptable and should never have happened.'
The company has to pay compensation to many customers but it is the damage to the company's reputation that is incalculable. Pursuing debts can be a time consuming and costly business. It is also an important credit management tool for firms to ensure that outstanding debts are pursued promptly and legitimately. The experience of Wonga has demonstrated how vital it is not to be tempted to take short cuts and for an organisation of any size to obtain timely legal advice before any demand letters are sent out to customers.
To discuss these issues contact us.