An expert loan shark buster has revealed the five red flags to be aware of – especially as they could be lurking in your inner circle.
With her experience and background, Cath Wohlers should be the ‘most unscammable person in the UK’.
But even then, the 47-year-old admits she’s been caught out before.
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As technology develops, scams and loan sharks are becoming more complex; though as the operations manager for England’s Illegal Money Lending Team, she’s seeing a rise in a particular group of people.
And they could be lurking in your inner circle right now.
“Loan sharks can be anyone – there’s no one-size-fits-all,” Cath, from Lancashire, told Need To Know.
“Before I started this role, I used to think that they were men in gangs with baseball bats.
“But it’s actually online, at the school gates, in the workplace or in your own home.
“It all starts with a simple gesture.
“If you’re struggling to pay the electricity bill, someone you know may offer to lend you the money.
“There’s no mention of interest or paperwork, so it’s seen as a favour.
“But we’re seeing people get caught out, as those lending the money will eventually want it back – and cause havoc when it’s not coughed up.”
Cath has dealt with her fair share of cases, including a woman who thought she was borrowing from a family friend.
She said: “She initially borrowed £50 from someone her sister knew.
“The deal was that when she got paid, she would give back double – so £100 – which she did.
“But that meant she was short the month after, so she borrowed again, before paying back double.
“This went on and on to the point where that initial £50 turned into £2,500.
“At that point, she had paid back £26,000 with the lender, who said she still owed £16,000.
“This lady was living off cornflakes and wasn’t able to feed or clothe her kids.
“The loan shark was following her to school, shouting abuse and sent lots of horrid messages each day.
“It made her life a living hell.”
So what are the red flags to look out for? Cath lists the top five.
NO QUESTIONS
She said: “If you’re offered a loan with no questions asked, it’s not a good sign.
“It also might be followed by them telling you not to mention it to anyone.
“It could happen at the office watercooler.
“You’ve not got enough money for the weekend, so your colleague says they’ll lend you the money.
“But it’s usually with the caveat that it cannot be mentioned to anyone.
“Then, when you don’t have the money come payday, they can make up repercussions that never existed.”
PERSONAL ACCOUNT
Cath warns people to be wary if they are asked to make payments to a personal account over a business account.
And if they are asked to pay in cash, in person.
She said: “If you’re given no paperwork or receipts, the loan is much harder to track.
“So you’ve got this outstanding debt over your head.
“And may never know how much you’ve paid back or how much you’ll still owe.”
HANDING OVER BELONGINGS
Cath said: “Loan sharks will often demand items like passports, bank cards or jewellery as ‘security’.
“But, in reality, it’s a way of tightening their grip and controlling every aspect of someone’s life.
“We see this all too often, effectively trapping people and stripping away their freedom.
“Others are forced to hand over bank cards or details, giving the lender direct access to their money whenever they choose.
“This leaves people cut off from their own finances and completely at the mercy of the loan shark.
“It’s incredibly isolating and devastating.”
HIGH INTEREST
In nearly all instances, there’s no paperwork involved – and this can lead to surprises down the line.
She said: “Loan sharks don’t give people an agreement to sign, because they don’t want people to know how much they’re going to pay back.
“They want to keep them in the dark and don’t want a written record of their activity.
“In the end, you’ll be paying a high amount of interest or extra charges and you may never be able to pay the loan back.”
FEELING AFRAID
Many people caught up will feel bullied, attacked or forced to do something they’re not comfortable with when struggling to pay.
Cath said: “About half the people we supported last year genuinely believed they were borrowing from a friend.
“Further down the line, they realised this person was not a friend after all.
“The threats aren’t physical a lot of the time.
“It’s coercive control, badgering people with text messages, hammering on the door or threatening to tell partners about loans.
“We’ve also seen loan sharks shaming people on social media.”
Cath did note, however, that borrowing money from family and friends isn’t always something to be wary of.
She added: “It’s just crucial to know who you’re really dealing with.
“It’s often those who appear friendly – people you don’t know quite so well or haven’t known for long – who pose the biggest risk.
“If you find yourself questioning why someone is offering you money, or what they might expect in return, that should be ringing alarm bells.
“Trust your instincts.
“If something doesn’t feel right, it probably isn’t.
“And that’s the moment to take a step back and protect yourself.”
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