It all started with just one online loan application. I did it less than a week ago and here is the score.
Number of spam emails sent to me: 361.
Number of unwanted text messages received: so much that my phone’s memory is full.
Amount charged to my credit card: Â£ 108.
Loans received: zero.
Welcome to the world of online lending, which I tested to see if its notoriety was deserved.
I started with Purple Payday, an offshoot of one of the big players, part of the Quintessential Finance Group, which grossed almost Â£ 8million last year.
As a hobby, its multimillionaire manager Paul Naden, 45, organized the Carbon Black rally so aspiring playboy riders could race from the UK to Monaco.
The Purple Payday site promises “A quick and easy way to borrow up to Â£ 1,000 online today”, but they never made a loan offer to me.
This is because it is not a lender, it just forwards your details to other companies. One of them was 5MinuteMoney, who texted me with the ‘quick cash within the hour’ offer.
5MinuteMoney is also not a lender and after filling out several online forms I was transferred to a third site, theloanline.com. âYou have been approved! He gushed, asking me for my credit card details.
But I was never likely to get a loan given the details I had submitted, which included being on benefits and turned down by payday lenders. I was simply granted access to a so-called limbs area – they should really be called sucker areas – where there was “a multitude of pre-approved loan offers”.
It was just a list of potential lenders like Wonga that you could get with any internet search and pre-approved, by the way, means “unapproved”.
Then came a text from LikeALoan: âBad Credit OK. Cash in 10 minutes. 2 easy steps. But there was no money, LikeALoan just passed my details on to another operation, Merlinloan.co.uk.
âAndy, you got accepted,â he said.
So I had a loan?
Uh no. I had just been authorized to enter another “member’s area”.
From there I was referred to Loans-directuk.net.
âAndy, you got accepted,â he would say – words I was getting used to.
Although he made it clear that I was penniless and getting benefits, Loans Direct wanted a fee. I didn’t go any further, but that didn’t stop taking money from me.
Merlin Loan took Â£ 49.99 from my credit card and Â£ 58.98 was taken from a company I had never heard of, the1loan.co.uk.
I contacted all the companies I mentioned, with one exception.
A spokesperson for Quintessential Finance said clients can opt out of third-party marketing and added, âIt is absolutely clear that Purple Payday is not a lender on both the homepage and prominently on the other pages of the site.
It is true that the site states that Purple Payday is not a lender – at the bottom of the home page in small purple letters on a purple background which is a fraction of the size of the text claiming it is “one of the UK’s major breakdown lending sites’.
Merlin Loan manager Laura Daniels agreed that they should state that they are a broker and not a lender on their home page and not just in their terms and conditions.
âI know it’s a shady market, but we do our best to be ethical and if someone says they really didn’t understand the site, we’ll pay them back,â she said.
No other âlenderâ I contacted responded.
The only company I didn’t contact was the1loan.co.uk because to access their website you need a password and that’s something I don’t have because although ‘he took my money, I never heard of it. Which says everything you need to know about this industry.
The watchdog is warned
âThe financial services industry continues to find ways to rip people off and take advantage of their desperation,â said Damon Gibbons of the Center for Responsible Credit.
âThe Financial Conduct Authority must crack down on it.
âHe needs to investigate and kick out of the market companies that are not doing a real service to people.
âA lot of people don’t know what they’re getting into, they think they’re applying for a loan and are actually signing up for a brokerage service.
âThe FCA needs to think very carefully about what an appropriate fee would be for this service.
“Most payday lenders work with lead generation companies, so they can make money by collecting personal information and selling it to loan companies, as well as charging fees from people.”
No loan but money is still lacking
Here is a typical example of the damage caused by this industry.
Darren Poulton needed a loan to help him out and approached a few businesses online.
As often happens, he quickly got lost in the maze of applications passed from one company to another.
The result is that he has no loan and two companies he says he has never heard of have taken money from his bank account.
One is Loan Wizard, from Bexhill-on-Sea in West Sussex, the other is Credit Cleaner, which uses a central London mailbox address.
Between them they took almost Â£ 80 from Darren, of Cheshunt, Herts. Neither of them answered my questions.
âI am self-employed and it has left me in dire straits and I can’t even put gasoline in my car to work,â he said.
Get in touch
If you are the victim of sharp training I want to hear about it. Email me at [email protected] or write to Penman Investigates, Daily Mirror, One Canada Square, London E14 5AP.
I cannot reply to every letter but I can promise to read them all. Please, no SAE or original documents.