Wonga wrote to my son, 12, urging him to take a payday loan
Payday loan provider Wonga has waded into more controversy after sending a letter to a 12-12 months-previous – offering a ‘special discount’ 
Photograph: Daniel Jones
On November 6, Dennis Earle obtained a letter from payday loan firm Wonga. “You’ve probably heard our name,” it stated, and presented him a unique price reduction on a loan of up to £400.
He considered he could use the income to go on vacation – but his parents explained no. Dennis is only twelve many years previous.
“At 1st I considered it was amusing, but then I realised why individuals complain about these companies,” mentioned Dennis’s father, Gavin, 44. “My youngsters are relatively wise but an additional youngster may have experimented with to get something out of it.”
Wonga had written out Dennis’s title in complete and sent the letter to the household house in Bishop’s Stortford, Hertfordshire.
The letter arrived the identical week that Wonga and other payday lenders had been attacked for the duration of a parliamentary hearing for “grooming” youthful individuals to take out expensive brief-term loans.
Wonga states clearly on its web site that folks have to be above 18 to qualify for a loan, which is standard practice among payday lenders.
Nonetheless, there is evidence that kids have taken out payday loans. An analysis of 780 circumstances reported to the Citizens Tips customer service amongst November 26 and Could 13 unveiled evidence of lending to beneath-18s. In one illustration, a carer contacted the charity about a payday loan granted to a youngster who was in the care of children’s services.
On yet another occasion a sixteen-yr-old boy had been able to consider out a payday loan with an on-line loan company. Citizens Tips said the loan provider had not checked how outdated the boy was before awarding the loan his mother, who contacted the charity, said she was unable to shut the account and was anxious that her son would take out even more loans he wouldn’t be ready to repay.
Gillian Guy, chief executive of Citizens Advice, mentioned: “No lender need to be targeting youngsters by way of marketing which suggests that obtaining into debt is the norm. We’ve had complaints from mothers and fathers and younger people below 18 who have taken out a loan without realising what they are getting into.
“This exposes the lack of checks, as lenders are not establishing who the borrower is, if they can afford to repay or if a loan is in fact suitable for them.”
On November 5 a parliamentary choose committee questioned representatives of payday loan businesses like Wonga about their higher curiosity expenses and the velocity with which they sent money to borrowers.
Labour leader Ed Miliband had earlier attacked Britain’s “Wonga economy” and mentioned payday lenders were responsible for a “quiet crisis of 1000’s of households trapped in unpayable debt”.
Martin Lewis, founder of MoneySavingExpert.com and a fierce critic of payday lending, condemned organizations for “grooming” young individuals with ads on children’s tv channels.
He advised the Agenciesthat even though Dennis Earle’s situation “sounds like a marketing error”, “it is an instance of the dangers we face with the normalisation of payday lending across a youthful generation”.
He additional: “The quantity of individuals taking these loans is far increased amongst the beneath-30s. Sadly, it’s turning into a trend.”
Dennis Earle’s mother and father stated they hoped any loan would have been refused, had their son acted on the letter. Teresa Earle, 43, a registered childminder, explained: “He had heard of Wonga by means of the adverts on tv but I do not consider Dennis is aware of what a loan is. He wouldn’t have acknowledged what to do.”
Their major concern was how Wonga obtained their son’s private information. “He is only 12 years previous, he is not on the electoral roll. I just can not see how they could link Dennis to anything at all,” explained Teresa.
When the Agenciesasked Wonga how this could have happened, a spokesman mentioned it recently ran “a modest direct marketing campaign” to make clear the company.
“We took special care to make positive we only contacted individuals aged 18 and over, which includes checks towards the electoral roll, and only wrote to folks who had selected to obtain this variety of communication.”
Wonga explained an online survey was filled out in Dennis’s identify, on which his age was given as more than 18. “We’re contacting his father with a lot more data about this, and have removed Dennis’s details from our database,” explained the spokesman.
“As a responsible loan company, we by no means lend to any individual below the age of 18. We have 1 of the most sophisticated danger-selection processes in the sector, which crunches thousands of pieces of information every time somebody applies for a loan. This includes quite a few checks on an applicant’s date of birth.”
The payday loan sector has grown swiftly in Britain considering that 2008 as banking institutions have grown much more reluctant to lend, forcing many families to discover other techniques to deal with their household finances. The Office of Honest Trading estimates that the industry was worth £2bn last 12 months, up from an estimated £900m in 2009. Lenders have been heavily criticised for focusing on vulnerable consumers and charging large curiosity costs, which can best five,000pc on an annual basis.
The Government will hand supervision of the sector to the Monetary Perform Authority, the monetary watchdog, in April.
Russell Hamblin-Boone, chief executive of the Customer Finance Association (CFA), which represents numerous payday lenders, said: “Ensuring that marketing and advertising actions are in no way directed at individuals who are not in a position to effectively understand the characteristics of a loan and the hazards related with borrowing is absolutely crucial.”
Wonga is a member of the Finance & Leasing Association, which declined to comment.