The Guardian has reported that:
Britain's best-known payday lender, Wonga, has been ordered to pay more than £2.6m compensation after it was found to have sent threatening letters to customers from non-existent law firms.
The Financial Conduct Authority (FCA) said Wonga had been guilty of "unfair and misleading debt collection practices". It said the firm would be compensating around 45,000 customers.
Now before I go further let me define fraud, which the Oxford dictionary says is:
- Wrongful or criminal deception intended to result in financial or personal gain
-
A person or thing intended to deceive others, typically by unjustifiably claiming or being credited with accomplishments or qualities
Now let's be clear what Wonga has done. First it has committed a wrongful act. Second, by doing so it did expect to gain: it wanted to recover a debt. Third, it did so in a way intended to deceive others by claiming the existence of lawyers who it not only had not engaged, but who did not even exist.
On this definition Wonga appears to have committed a fraud.
Three questions arise. First, why is there no prosecution in that case? This is serious.
Second, why are they still considered fit and proper person to run an organisation regulated by the FCA?
Third, why are the directors allowed to continue to hold that office?
I think answers are needed.
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Two directors including founder have left in the last 6 months.
Well, you need to look in the Fraud Act rather than the dictionary. Not my area, but I rather suspect the answer is that a deception intended to collect a debt that’s lawfully due to you is not fraud. I expect a criminal lawyer would know the answer off the top of their head.
I have looked at the Fraud Act
I think that makes the case even more strongly – they tried to impose charges by deception, I gather
From the FCA press release it says they tried to get the arrears payments by deception. Which would seem to suggest that the deception itself didn’t trigger additional charges. Ie simply being in arrears would have incurred the charges.
Also getting money owed to you can hardly fall under the definition of a ‘gain’.
No – the demand was for the costs of sending the deceptive letters
So there was a gain from the deception – which was a claim costs had been incurred for a reason which was not true
We might also ask how it is that, as the BBC reports, the FCA cannot fine Wonga because the “misconduct” in question occurred before the FCA took over the regulation of payday lenders. How much other “misconduct” might be covered by this handy rule and what does Parliament propose to do to fix it?
http://www.bbc.co.uk/news/business-28015456
This is astonishing – but appears to be true
How did that happen?
From The Guardian:
“The letters from “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries” were sent in 2008-2010 when the firm was regulated by the old and toothless Office of Fair Trading. The Financial Conduct Authority, which took over the investigation when it came into being last year, has greater powers but naturally is not allowed to use them retrospectively.”
It’s that “rule of law” thing. You can only be tried for something that was a crime at the time that you did it. And if you’re guilty (as they seem to be) then you can only be punished under whatever the law said was the appropriate punishment at the time that you did it.
Why are you always on the side of they user Tim?
Is it garden wired into you to defend wrong doing?
“Second, by doing so it did expect to gain: it wanted to recover a debt.”
I suspect, in law, you cannot “gain” an amount that is already due to you. You recognise it as income as it accrues and set up a debtor in the accounts. Recovery or settlement of a debt cannot lead to a “financial gain”, surely it is merely the conversion of one asset (a debtor) into another (cash).
You can if you ask to recover charges from someone who does not exist – which is what they did
There are many deep questions relating to usury, particularly whether a loan contract can actually be enforced in English Contract Law when the lender would have to be able to establish consideration. An exorbitant rate of interest may also be challenged. This link includes an interesting exchange of FOI correspondence with BoE.
https://www.whatdotheyknow.com/request/money_creation_law
Is it appropriate in this sort of case to write to the DPP and ask them what the heck they think they’re playing at? The mea culpa on Wonga’s site seems to freely admit that they charged people lawyers fees for law firms that they simply made up – the digital equivalent of pinning a notice outside your office announcing you stole money, no?
No
Also:
“In some instances, Wonga also added charges to customers’ accounts to cover the administration fees associated with sending the letters. It is a criminal offence for anyone to call themselves a solicitor or act as a solicitor if they are not one, but it is thought the offending letters and emails from the fake firms did not use the word solicitor.”
Not what Paul Mason at Channel 4 News found
I can’t imagine that not using the word solicitor is likely to be a defence if they are holding themselves out to be a law firm.
S.17 Legal Services Act 2007:
(1)It is an offence for a person–
(a)wilfully to pretend to be entitled to carry on any activity which is a reserved legal activity when that person is not so entitled, or
(b)with the intention of implying falsely that that person is so entitled, to take or use any name, title or description.
Fraud may or may not be relevant. However it is certainly an offence to hold yourself out as a solicitor when you aren’t on the roll. I’m surprised the SRA hasn’t stepped in – however you can report this sort of behaviour through their website if you are so inclined. The protected status of lawyers and law firms is designed to stop precisely this sort of behaviour.
“You can if you ask to recover charges from someone who does not exist — which is what they did”
Apologies then but I am only going by what you have written. You said originally “to recover a debt”, which I assumed to mean the balance owing on the customer’s account. If it is recover non-existent charges then no debt could have existed in the first place. Maybe I should read the story first rather than rely on you!
I provide links for a reason – I rely on them