Payday loan firm Wonga faces the prospect of a damaging criminal investigation after the
The controversial lender was fined pounds 2.6m this week for sending letters to struggling borrowers in the names of fabricated law firms - and in some cases charging an administration fee for their services.
Initially it seemed Wonga might escape a police investigation, but amid intense pressure for action - including from the head of the
In a statement issued yesterday, it said: "Now the regulator's investigation has concluded, and a compensation agreement has been reached with Wonga, the
Wonga, which offers short-term loans at an annualised interest rate of 5,853%, sent letters to thousands of borrowers under the names of nonexistent law firms.
The letters were typically headed "Urgent message" and began: "We have been instructed by Wonga to recover from you a debt of pounds X . . ."
Hudson said: "It seems that the intention behind Wonga's dishonest activity was to make customers believe that their outstanding debt had been passed to a genuine law firm. It looks like they also wanted customers to believe that court action undertaken by a genuine law firm would follow if the debt was not repaid.
"Depending on the precise circumstances of what has happened, that could amount to blackmail and deception, as well as offences under the Solicitors Act 1974 and Legal Services Act 2007."
A spokesman for Wonga said it was focusing on compensating the 45,000 customers affected by a "historic" debt collection issue. He added: "We have been working over the past two years with two regulators - first the
It emerged this week that
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