You may know Wonga from their cheery TV ads featuring knitted OAPs. Hopefully you don’t know them from borrowing money off them, given that their APR gets up to 5853%. They offer payday loans at huge interest rates. Whilst it may not be part of their official stchick, there is a general view that they target people who are the most vulnerable and cannot access finance from more mainstream financial institutions.
Well, on 25th June 2014 they got into a bit of trouble with the Financial Conduct Authority (‘FCA’) for sending letters who were in arrears with their payments from organisations that appeared to be solicitor firms. The names included “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries”. According to the BBC, “The plan was to make customers in arrears believe that their outstanding debt had been passed to a law firm, with legal action threatened if the debt was not paid.” To make matters worse, “In some cases Wonga added fees for these letters to customers’ accounts.”
You can read the FCA report here in full. They have given Wonga a firm rap round the knuckles and directed that the people affected be compensated to the tune of £2.6 million.
This is all a bit embarrassing for Wonga, but is it more than that? As Stella Creasy, the MP for Walthamstow asked on twitter :
So. Are there any criminal offences here?
The Fraud Act is always a good start. What about s2 – Fraud by False Representation? Someone commits fraud if they dishonestly make a false representation, intending to make a gain for themselves or cause a loss to another, when they know that the representation is false and misleading.
Looking at that, under s2(5) “For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention)“. It is probable that a headed paper implying that a letter comes from a law firm is a false representation, so we can tick that box.
What about the fact that, under the contract with the customer, they were owed the money? There is a very wide definition of ‘gain’ and ‘loss’ in s5. It is likely that this would fall into the section, with the safety valve being the requirement of dishonesty. For that reason, subject to the question of whether Wonga were being dishonest, this offence would appear to be committed.
Impersonating a solicitor
There are two possible offences here. Firstly, under the Solicitors Act 1974. There is an either way offence of acting as a solicitor when not being one (s20), but it is likely that there was nothing done here other than send the letter implying that it was from a lawyer.
It is also an offence (under s21) for someone who “ wilfully pretends to be, or takes or uses any name, title, addition or description implying that he is, qualified or recognised by law as qualified to act as a solicitor“. This is summary only which looks like a problem (as there is normally a six month time limit for bringing proceedings and Wonga’s practice here stopped in 2010).
s26 extends this time period, but not by enough in this case – proceedings in respect of any offence under section 21 may be brought at any time before the expiration of two years from the commission of the offence or six months from its first discovery by the prosecutor, whichever period expires first“.
There is an offence of pretending to be entitled to carry out a reserved activity under s17 Legal Service Act 2007. This can get a bit complex, but it may well apply if the bogus letterhead said, as an example, ‘Commissioner for Oaths’ as oath taking is a reserved activity.
So, although this offence looks good on paper, it’s actually pretty unpromising. A further issue is that whilst pretending to be a solicitor is a criminal offence, stating that someone is a lawyer is not.
This is an offence under s21 Theft Act 1968 :
A person is guilty of blackmail if, with a view to gain for himself or another or with intent to cause loss to another, he makes any unwarranted demand with menaces; and for this purpose a demand with menaces is unwarranted unless the person making it does so in the belief—
(a) that he has reasonable grounds for making the demand; and
(b) that the use of the menaces is a proper means of reinforcing the demand.
The fact that Wonga is entitled, under the general law of contract, to the money does not of itself mean that a threat to sue cannot be a ‘menace’ (although it may be hard to persuade a jury of this) or that a threat to sue (especially if it is using a fake law firm) is unwarranted. It is clear that ‘gain’ includes ‘getting money to which you are entitled to’.
So, whilst ‘blackmail’ conjures up connotations of masked men making a ransom demand after a kidnapping, this may well be close.
Harassment of Debtors
This is a little known offence under s40 Administration of Justice Act 1970. It is committed when someone:
“with the object of coercing another person to pay money claimed from the other as a debt due under a contract, he—
(a) harasses the other with demands for payment which, in respect of their frequency or the manner or occasion of making any such demand, or of any threat or publicity by which any demand is accompanied, are calculated to subject him or members of his family or household to alarm, distress or humiliation;
(b) falsely represents, in relation to the money claimed, that criminal proceedings lie for failure to pay it;
(c) falsely represents himself to be authorised in some official capacity to claim or enforce payment; or
(d) utters a document falsely represented by him to have some official character or purporting to have some official character which he knows it has not.“
There is a general defence (s40(3)) if what was done was reasonable. It seems that the case against Wonga under either (c) or (d) is a pretty strong one. The difficulty here is that this offence is also summary only, with no extension period, and so it would appear to be time-barred.
Wonga was never one of those brands that is thought of highly by the public, but this won’t have done anything to help it. Have they broken the law? It’s an interesting question. It is unlikely that the police or CPS would get involved. If Ms Creasy wants to launch a private prosecution however, then she is perfectly entitled to…