Up to a million people turn to illegal moneylenders to pay their bills, despite exorbitant interest rates. Three-quarters of victims receive benefits. Ten years ago, 300,000 loan sharks used
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Ruthless loan sharks gather outside welfare offices to capture desperate victims.
They were seen hiding in a Department for Work and Pensions office and even followed a woman home.
Up to a million people turn to illegal moneylenders to pay their bills, despite exorbitant interest rates.
Three-quarters of victims receive benefits. Ten years ago, 300,000 loan sharks used loan sharks. Sylvia Simpson, of Leeds-based debt advice center Money Buddies, said: “They are like vultures. They hang around the DWP offices waiting for people to come out.
“It is a crisis situation. Every day people arrive without food or with ushers knocking on the door.
A woman was followed on a bus from her DWP office in Leeds and then tricked into accepting a £50 loan to buy food.
She changed her mind and went to a debt counseling center in the city, which repaid the loan.
Ms Simpson told of a client where the loan shark would wait for her child outside the school gate because he was a friend of the family. She said: “The mum had come after him and she was really intimidated. That’s the kind of thing they do.
“You borrow £50 and they come back the following week and ask for £100. It’s getting out of control and people don’t know what to do.
Authorities have retaliated in some cases. This month, 10 investigators from England’s Illegal Money Lending Team, backed by cops, seized £3,000 in cash and papers in Oldbury, West Midlands.
A 47-year-old woman was questioned about illegal money lending and released pending further investigation.
The Center for Social Justice think tank said lenders often pretend to be friends before claiming double the amount a few weeks later. CSJ’s Joe Shalam said growing pressure on household budgets, lack of savings and increasingly limited credit options “are likely to produce a perfect storm” in which people are exploited.
Four in 10 households face energy poverty this autumn, as energy bills already up 54% to nearly £2,000 are set to rise another £600.
The CSJ urges a crackdown on illegal lending, including stepping up EIMLT operations and encouraging more credit unions to help those at risk. He also called on the government to renew its fight against loan sharks.