Persistent text marketing, fictional solicitors and suspect ads. Wonga.com aren’t so friendly now.
You’ve all heard of Wonga, with their jolly adverts and cartoonish website. Lending money to people at a ‘representative’ APR of 4214% is not a serious business at all. It’s fun! And with Moneysupermarket.com reporting a 400 per cent increase in people looking for payday loans since the beginning of the year, it’s popular too.
But a Bitterwallet reader who had availed himself of Wonga’s services contacted us, concerned about the SMS marketing he was receiving, and was powerless to stop. Now we don’t like to hear of powerless consumers, nor do we think pursuing people who, in all likelihood, have already got money worries with offers of easy cash, is particularly responsible of Wonga as a lender. So we investigated.
We started with the texts themselves. Now, as a Wonga victim customer you are required to give them a mobile number so they can text you a PIN number that you must enter on the website in order to get your cash. Clearly this is how they get your mobile number.
Our guy repaid his loan on time, but has been receiving text messages every couple of months ever since. And he can’t stop them. Upon logging into his account the only preference he can change states “Communications preference- Would you like to receive Wonga news, offers and service updates via email?” Absolutely no mention of SMS messages. And even when this box is ticked 'no', the SMS keep on coming. We asked Wonga about the continual receipts of SMS. They said it was “an isolated glitch.” We’ll leave you to decide whether you believe them.
So given Wonga have already breached these regulations, what about the principle of sending messages offering money to the cash-strapped? Not that Wonga have a great reputation here- they were heavily criticised last year when their sponsorship of the free new years eve tube allowed them to advertise “sometimes you need extra cash” to the drunk and happy, with not the merest whisper of an APR. A quick search for ‘Wonga’ also reveals less than transparent debt collection tactics, with customers receiving threatening letters from ‘Solicitors’ firms’ that are really just made up trading names of Wonga or its parent company Quickbridge UK Ltd.
Well, when we asked Wonga about how responsible this was, after raving on about how responsible a lender they are (something repeated ad nauseum all over their website) they sent us a copy of their Code of Conduct. And the number one operating principle?
“you will never be sold, encouraged or forced to borrow more credit than required”
So, sending an unsolicited text offering credit to someone who has not expressed a need for credit is clearly not encouraging them to borrow. As that would contravene their own code of conduct. But it’s OK- Wonga told us “we sometimes remind customers that we’re here to help if we haven’t seen them in a while, but we never hard-sell our service.” So that’s what it is. A reminder.
So we contacted the Office of Fair Trading, who grant Wonga its credit licence to see whether there was any official wrongdoing. And unsurprisingly, they offered no help. The SMS data protection issue is one for the Information Commissioner, and the OFT definition of ‘responsible lending’ is doing a credit check. No more, no less. However the OFT did say that they would take customer complaints into account when considering whether to revoke a licence.
So, aside from a slapped wrist from the ICO, which will most likely end up in an unsubscribe link in the SMS, will Wonga change? Unlikely. In an interview with the Guardian last week, Wonga founder and former investment banker Errol Damelin said “We are the good guys... [we offer] an important social service. To have social mobility you have to have credit available to people where it’s required and where it's appropriate."
So Wonga can legitimately call themselves responsible lenders, and consider themselves an aid to social mobility. Welcome to toothless regulation in the UK 2011.