Friday 7 October 2005

Consumer Watchdog starts up a new business

We’ve been inspired by our recent investigations and the on-going activities of the informal lending sector to consider a new business venture. Rather than compete we’re going to join the competition. We’re going to become loan sharks.

We’ll get cheap office space

Firstly we’re going to operate from our existing employer’s office. After all they very generously give us an office so why shouldn’t we use it? That way we won’t have to pay any heating, water or phone bills, we’ll get occasional cups of tea and plates of biscuits at the meetings we can’t avoid and we’ll have people to chat to when business is quiet.

We’ll also look like we’re really busy with all the visitors we’ll get. The boss may even think we’re performing really well. We might even get promoted!

We’ll charge vicious interest rates

First rule of the business - we’ll charge exorbitant interest rates. Of course we know that our victims, sorry clients, will be able to get a loan from their bank at a much lower interest rate and without having to make enormous sacrifices, but well, we don’t care. We’ll charge a huge amount more than them but we’ll hide it by giving you ridiculous rewards like P50 if you bring along another victim! If you pay on time we’ll very generously splash out P20 and give you a couple of cans of a sugar-laden, tooth-rotting, diabetes-inducing, fizzy drink we got cheap somewhere.

We’ll also trick you by relying on the fact that you weren’t so good at maths at school. We’ll quote monthly interest rates instead of the annual rates banks quote. We’ll somehow forget to mention the penalties we’ll impose on you if you default on a repayment. We’ll not even mention the issue of compounded interest! Why would we want to bother you will all those boring facts? You might change your mind and not borrow anything from us!

We’ll pretend to be legitimate

We’ll suggest (but never actually prove) that we’re members of the Micro Lenders Association and that consequently we’re governed by their rules and that as a result we have to behave reasonably. Obviously we’ll probably never join them. Why would we want to?

Of course if for some reason we DO have to join them we’ll just break the rules flagrantly. We’ll charge more than the 30% per month limit they impose, we’ll just not tell them. Yes, we’ll pretend to abide by the rules, such as registering every customer with Compuscan, their computerised register of customers that helps to prevent people borrowing too much. But why would we really want to? That would only stop us from lending money to people who can struggle to pay us back all that money and that lovely interest! Why don’t we just not register them and continue to lend? What’s the worst that might happen?

“Give us your ATM card”

Of course we’ll demand that you give us your ATM card and give us your PIN before we actually give you any money. You won’t need it as much as we will. After all, how can we guarantee we’ll get our money from you? Also, if we feel like taking a little more from you because we’re either having a bad month or, well, we just feel like it, we’ll be able to!

If by any chance you happen to find out that we’ve taken a little too much what will you be able to do about it? Complain to your bank? They’ll just tell you that you shouldn’t have given away your ATM card and PIN. They’ll say it’s all your fault and they’re not in any way responsible. Guess what? They’ll be right!

And if you hear that giving your ATM card to a loan shark like us is a bad idea of course we’ll tell about the letter of authorisation we have from various banks that allows us to do so with their blessing. We won’t actually show you the letter though. That’s because it doesn’t exist. It never did. It never will do. But it sounds good doesn’t it?

Give us your bank statements and Omang as well

We’ll also demand to see copies of your bank statements before we give you’re the money. Why? Well, obviously so we can see how much you earn and therefore can get an idea how much we can persuade you to borrow. Also so we have a good idea how much money is normally in your account and how much we can take if we have one of those bad months!

Oh yes we’ll also demand to see your Omang number and get details of your address and personal details. That way we can pretend to be you and call the credit agencies to check up on your status every now and then. We know how easy that is!

We’ll make you ours for life!

So you find it difficult to make the repayments because we charge all that interest? By mid-month you can’t afford what you owe us? Borrow some more! We’ll happily lend you another few hundred to tide you over until pay day. So that will only make you more dependent upon us?

Why on earth should we care?????

And if you refuse to pay?

So you get to the point that you simply can’t or won’t pay us back what you owe us? Excellent! We’ll just come round and borrow your sofa, your car, your father’s car. Permanently.

Oh and we’ll then punish the next guy who borrows from us with an even higher interest rate to get our money back. We don’t really care who pays us so long as we get the money.

Oh and if you threaten to report us to the Police, the City Council, Consumer Affairs or your lawyers?

We’ll break your fingers!

OK. We’re sorry. We don’t mean it. We’re joking. Honestly. Promise!

But can’t you just hear this going through the heads of some of the loan sharks around the country? Can’t you see why there are so many of them? Can’t you see why we need protection from this sort of abuse? Loan sharks like wild dogs prey on the weakest, the most desperate and those in distress.

What’s the solution?

Read next week’s article for some ideas!

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