Former TfL sponsor Wonga has been reprimanded by the Office of Fair Trading for using “aggressive” and “misleading” debt collection methods.
According to the OFT Wonga’s staff sent a number of customers debt collection letters which suggested they had committed fraud and could face police action.
In a statement the OFT said: “Without having appropriate justification the letters or emails suggested that customers may have committed fraud and that Wonga would consider contacting the police if customers did not act as Wonga requested.”
The OFT says the letters and emails “were sent to customers who had claimed money back from Wonga by asking their card providers to reverse a payment made to the company. They were also sent to some customers who had entered into debt management plans.”
The firm has been told to ensure its debt collection practices are acceptable in future and “must not, without appropriate justification”:
- allege that a customer has, or may have, engaged in criminal conduct or refer to the consequences of such conduct
- state that a customer should not be in debt if the customer has a certain employment status or for any other reason
The OFT has the power to fine companies up to £50,000 per incident or, in extreme cases, revoke a consumer credit licence, where they fail to comply with such a requirement.
David Fisher, OFT Director of Consumer Credit, said: “We have acted to ensure that Wonga does not behave this way again. I would like to make it clear to businesses that they must not adopt aggressive or misleading practices with their customers’.
The high interest loan company told the BBC: “The OFT has adduced no evidence that the communications have ever been sent again, or the collections script has ever been used, while Wonga has demonstrated its enhanced procedures ensure that there is no risk of such communications being sent again, or the script being used,”
In 2010 the company, which currently levies an APR interest rate of 4214%, sponsored TfL’s free New Year’s Eve travel, a deal which led to criticism of TfL and Mayor Boris Johnson.
City Hall defended the deal saying the Greater London Authority was “entitled to seek sponsorship from any legal UK company who has made money through legitimate means.”
However the London Assembly subsequently called on the Mayor to adopt “a code of ethics governing for future sponsorship and advertising deals.”
In February an Assembly report asked TfL to set out “how it would manage a situation where a sponsor suffered major reputational damage” after an sponsorship agreement was entered into.