Cashfloat.co.uk reports on a new activity in the UK which targets payday loan customers

Cashfloat.co.uk reports on a new activity in the UK which targets payday loan customers who feel mistreated and are looking for help in making a complaint.

Western Circle trading as Cashfloat is a London-based payday lender that has recently become aware of a new scheme operating in the UK payday loans market targeting unassuming payday loan customers. The operations are believed to be run by the same companies who ran the PPI refund scamsin the infamous PPI scandal. Here is a breakdown of what’s going on:

Payday Loan complaints

When a payday loan customer is dissatisfied with the service they receive, they have the right to complain. They can complain directly to the lender, which is easy and free and normally the most effective. If they are still dissatisfied, they can complain to the Financial Ombudsman Service (FOS) – a government-run agency dedicated to helping UK consumers protect their rights. So if customers can make a direct complaint, why would a Claim Management Company offer to submit the complaint for them?

The Scheme

Cashfloat.co.uk, a trading name of Western Circle Ltd, discovered that Claim Management Companies are persuading payday loan customers to issue a complaint through them in exchange for 30-40% of the compensation money, even though complaining directly to the lender is free and far easier. In fact, just this month, the Advertising Standards Authority (ASA) banned an advert of a payday loans claims company that ‘exaggerated the ease and speed’ of getting a payday loan refund through them. You can read more on the subject on Cashfloat’s website.

The scheme then goes one step further. When a complaint is made to the FOS, the lender is charged a hefty fee for the FOS to deal with the complaint. What some unscrupulous CMCs will do is effectively blackmail the lender into paying them a part of the sum in return for not submitting the complaint. In this scenario, the lender loses money, the customer is left dissatisfied and taken advantage of while the CMC earns a tidy sum.