scandal of ‘lost’ customers' cheques

Payday lenders regularly ‘lose’ cheques sent by customers to settle debts, forcing borrowers to pay even higher interest bills, Financial Mail has learnt. The tactic used by a number of payday loan firms aims to maximise profits by effectively locking in hard-pressed borrowers for extended periods. The ploy will heighten concerns over the sector, which entices desperate customers into taking loans with interest rates as high as 4,000 per cent.Paul Lynam, chief executive of Secure Trust Bank, whose Everyday Loans subsidiary frequently deals with customers seeking to consolidate loans to settle payday borrowings, said: ‘We will normally forward direct to the payday lender a cheque in settlement.

‘One thing that we find very surprising is the ability of some of these payday loan companies to regularly lose this settlement cheque, which has the effect of delaying settlement of the debt and incurring more very high interest rates for the trapped borrower.’ His company is frequently forced to send settlement cheques by recorded delivery before the payday loan firm will cancel the outstanding debt.....Read more here: Scandal of lost payday loan cheques