The Office of Fair Trading has revoked the licence of payday lender, MCO Capital, for failing to have robust security checks in place.
The firm which trades online as Speed Credit, Pop Credit and Paycheck Credit, handed out money in more than 7,000 cases to fraudster who had stolen victims’ identities.
The payday lender then proceeded to chase the innocent parties for money they never borrowed, in many cases using aggressive and inappropriate tactics.
The high incidence of fraud within the company was first highlighted two years ago, when MCO Capital, then trading as Help Loan, suffered £1.5 million of fraudulent applications within the first three months of launching. The firm was criticised for the heavy handed way it chased innocent victims and it told the OFT that it had stopped trying to chase payment.
However, the OFT said that innocent victims continued to receive demanding letters from MCO Capital, despite the watchdog ordering the payday lender to cease. The director of credit at the OFT, David Fisher, said the letters sent out by MCO Capital ’caused unnecessary distress and inconvenience.’
The OFT has been highly critical of the payday lender’s failure to comply with money laundering regulations, a shortcoming which not just meant money was paid out fraudulently, but also led to the harassment of innocent victims.
As well as suffering the loss of their licence, MCO capital were also slapped with a fine of £544,505 by the OFT.
However, if they opt to appeal against the decision, they will still be allowed to continue trading until the case has been heard, a process which has been criticised by many. Calls have been building from many quarters, including Consumer Focus, for the new financial regulator to be handed more powers to immediately shut down rogue firms.