Illegal money lending

• An estimated 200,000 UK households are using illegal money lenders
• People in the UK repay £120 million per year to illegal money lenders
• Victims most likely female, aged 30 - 40, on benefits, living in social housing
• Illegal money lending is concentrated in deprived communities in society
• Only a minority (3/10) of borrowers have chaotic lifestyles (e.g. drug/alcohol abuse or gambling problems), the rest have exhausted legal credit options or are targeted

What is a loan shark?

A loan shark is someone who lends money to a number of people, without the licence require by the the Consumer Credit Act 1974. These licences are issued by the Office of Fair Trading to individuals or companies who they believe are 'fit and proper'.

Typical characteristics displayed by loan sharks.

• No credit agreement given -'you owe me this today'
• No receipts for payment or payment books
• Violence or intimidation (or threats of such) if repayments are missed
• Loans or young people (under 18's)
• Can take illegal securities e.g. cash card
• Never advertise - find clients by word of mouth
• Repayments of at least twice the amount lent, often with high charges for defaulting

Myths

There are lots of myths around loan shark activities eg:

Myth - You have to pay back what the loan shark says you owe
Fact - A loan made by an illegal money lender (without a license) is unenforceable without a validation order for the Office of Fair Trading. This means that you cannot legally be made to pay it back.

Myth -The person is my friend, they have helped me out when times have been tough.
Fact - Friends do not make unreasonable demands. Use intimidation and threats to obtain money.

Myth - If you borrow from a loan shark, you commit an offence.
Fact - It is the loan shark who is behaving illegally. Reporting the loan shark's activity will not get you into trouble with the authorities.

Myth - Illegal money lending is a victimless crime
Fact - Clients of illegal money lenders are often intimidate into paying back substantially more that they borrowed with threats of violence common. Whole communities are affected by their activities, as residents may be forced to turn to crime to enable them to pay back the inflated loans. Loan sharks are often linked to other criminal activity such as drug dealing and counterfeiting.

Myth - Loan sharks provide a reasonable priced service
Fact - The average cost of borrowing from a loan shark is three times the price of the highest cost of legal credit. the highest interest rate the team have come across so far was 117,000% APR. One victim was receiving benefits of £74 per week. The loan shark took £50 a week, leaving them just £24 to live on.

Seek help and advice from Trading Standards before taking any formal action.

Loan shark project

The project began as a pilot in Birmingham in 2004. Due to its success it was rolled out across England in 2008 and has funding until 2012. The team consists of investigators including ex-police and serving police officers, recruits from private fraud investigation companies and trading standards officers. There are also financial inclusion partnership officers who create links to local agencies offering advice, support and provide individual support to all loan shark victims.

Our successes

• Seized and confiscated £1.3 Million cash
• Helped over 16,000 victims
• Written off over £40 million of illegal debt
• Prosecuted and secured significant custodial sentences totalling over 119 years for illegal money activity and associated crime