Fighting Payday Loan Fraud

While payday loans offer an informal, flexible way of finding cash when you need it most, it is important to be aware of the consequences of any deliberate attempt to avoid repaying the payday loans charges. This is a form of fraud, and is treated accordingly.

Tracking Frauds

When deciding to accept applications for payday loans, responsible lenders will make sure you meet the age and UK residency requirements, and that you have a regular income and a bank account. This is based on the fact that payday loans are agreed to be paid back in the following month's paycheque. Pay loans are intended as a form of short-term finance, and customers are always expected to budget to ensure they are able to repay the loan on the date agreed. If customers are unable to pay back the amount, with the loan charge, on the following payday, it is often possible to arrange a 'rollover' loan for the following month, for an additional charge. What this means is that there is no excuse for not being able to pay back when requested, as the first loan is given on the understanding of repayment in full on a particular date.

Measures That Can Be Taken with Payday Loans

Under the Fraud Act, lenders have power to take borrowers who have refused to pay to a Magistrates Court, who can order the amount to be paid and impose sanctions. Most often, the debt will be passed over to debt collection agencies, which have their own powers that enable them to recover the debt, including the ability to seize property. The value of the property seized will be enough to cover the cost of the debt and fees, plus the debt collector's costs. It is also possible for proceedings to go through the Small Claims Court or a County Court, which has greater powers regarding credit. If a judgment is made against an individual in this court, it is likely to be recorded on the person's credit history. This is unfortunate, as payday loans do not generally deal with credit histories, even if you need to apply for several months' rollover.

This would only be taken as a last resort to fraudulent customers with no intention of paying. As lenders will have verified the borrower's identity when the loan was applied for, any of these actions can be done quickly and easily. The main thing to remember is that, if you're unable to make the payment for your Payday Loan, arrange a later payment as soon as possible, rather than putting it off and possibly facing such harsh action. The sooner you do this, the sooner you can budget to have the whole thing paid back. Doing this puts lenders in the picture, and is part of the flexibility of payday loans.

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