“Payday” couldn’t be further from reality for millions of people who have endured raids on their bank accounts by companies working on behalf of high-interest loan companies in recent months.
According to NatWest, which has sounded the alarm over the disturbing new practice, “payday loan brokers”, who work in collaboration with payday loan companies, are attempting to extract money from bank accounts as many as one million times per month.
According to the Guardian, NatWest receives up to 640 complaints a day about the issue, and the Financial Ombudsman’s Service has also received a wave of complaints from concerned customers.
Typically the companies are attempting to extract sums in the region of £50 – £75. Customers don’t recognise the names of the companies taking the money, but they are in fact linked to payday loan companies.
The brokers are usually online intermediaries who say they will try and find loans for people.
The brokers’ websites say they need the applicant’s bank details to look for a suitable loan, then hidden in the small print is a clause saying they will charge £50-£75 to find a loan provider.
The loan itself may then have an APR of several thousand percent.
In the worst cases these intermediaries may share the applicant’s bank details with up to 200 other similar companies who may also then attempt to take money from the applicant’s account.
NatWest said that complaints are usually from its most vulnerable customers, many of whom are already severely overdrawn.
The insidious techniques used by many of the brokers include targeting accounts soon after midnight, which is when state benefit payments reach accounts.
This has meant that people already struggling to make ends meet, who are being given state assistance, awake to find their payments have already vanished.
RBS and NatWest head of fraud and chargeback operations, Terry Lawson, said: We’ve seen large numbers of customers incurring charges they don’t expect when using a payday loan broker since July this year. Customers’ account or debit card details are gathered and sent on to up to 200 other brokers and lenders who charge them fees for a loan application.
“At its height we were seeing up to 640 calls a day on unexpected fees, but we’re pleased to say we’re seeing this decrease on account of the actions we’re taking to help stop these sharp practices.”