Wonga hit by £2.6m compensation bill over fake legal letters
Wonga has been hit by a £2.6m compensation bill after the payday lender was found to have written fake legal letters from fictitious lawyers in a bid to scare borrowers into stumping up outstanding loans.
The practice saw 45,000 customers issued with such letters between October 2008 and November 2010 with letters headed ‘Chainey, D’Amato & Shannon’ and ‘Barker and Lowe Legal Recoveries’,
threatening legal action if the debts were not repaid.
In some cases Wonga had the gall to add supplementary charges to outstanding debts to cover the cost of issuing the fake letters.
Clive Adamson, director of supervision at the Financial Conduct Authority, said: “Wonga's misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears.
“The FCA expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments."
Tim Weller, interim chief executive of Wonga, said: "We would like to apologise unreservedly to anyone affected by the historical debt collection activity and for any distress caused as a result.”
Wonga will begin contacting affected customers by the end of the month.