It’s not unusual that students need some extra cash, especially for the month leading up to the holiday season — but where do you find that money? Have you ever encountered someone who was willing to give you that money and would happily give more to you or any of your contacts? Before you take it, think about the possibility that they are a loan shark!
Now what are loan sharks? You might have heard of them or seen them in movies. You might think of a seedy guy who dresses like an old gangster, but I was surprised to hear in our training from the Illegal Money Lending Team (IMLT) that they can look like anyone. They could be someone your age, an elderly neighbour or wealthy professional. In different cultures, they can be known by other names like Ah Long in Malaysia or Chulcos in Ecuador. Despite different appearances and names, they all do the same thing, and it is not only destructive for anyone taking money from them, but also illegal.
In the UK, anyone lending money must be approved by the Financial Conduct Authority (FCA). Loan sharks are not approved and will use practices which put you at risk of exploitation and harm. Initially, they can seem very nice and look like they are just trying to help you out like a friend – this is to build trust and to get you to accept the money. There usually isn’t any paperwork, just an informal agreement and no explicit terms or conditions. They may take your personal information including passport or bank details for security, then suddenly tell you that there is a huge amount of interest or repayment. If you can’t meet their demands, they may threaten you and harass you. You might end up taking out more money to repay them or be told to carry out criminal activity. They may even threaten to take you to court for not repaying.
This all sounds very scary, but I was relieved to read on MoneyHelper that only the loan shark is acting illegally, and although you may feel embarrassed, scared, or guilty for taking the money, it isn’t illegal to take the loan and you are seen as a victim of a crime. Therefore, it is important to report them if you suspect you are dealing with a loan shark so that you stop being harassed and to prevent further harm.
Helpfully, I found you can check if your lender is authorised by the FCA. But even if they are authorised, anyone harassing you for repayment is committing a crime. To report someone in England, go to https://www.stoploansharks.co.uk/ or ring their hotline on 0300 555 2222. Any contact is treated confidentially, and they will investigate the lender. They can also protect you and your family during this process. Of course, if you feel you are in immediate danger, call the police on 999.
I know for me that learning about loan sharks isn’t just about looking out for me, but also my friends and family! I hope that this blog has made you think twice about taking money for Christmas presents from that friend of a friend…
Rebecca Lam
King’s Student Money Mentor
Part of Money & Housing Advice
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