Payday Loan Company Shut Down After Allowing Identity Thieves to Borrow Millions

March 25, 2013

An online payday lender has been shut down after failing to carry out adequate identity checks for loan applicants, which led to fraudsters borrowing millions of pounds using false or stolen identities.

MCO Capital Limited, which traded under names which include Help Loan and Balance Loan, was targeted by fraudsters who used the personal details of over 7,000 people to apply successfully for loans totalling millions of pounds.

The OFT found that even when the company realized its error, it pursued the innocent victims of the fraud by writing to them asking for repayment. The Office of Fair Trading (OFT) requested that this stop, but the request was ignored by MCO.

The OFT fined the company £544,505 in August of last year for breaking Money Laundering Regulations, and at the time also revoked their licence. The MCO appealed the decision and were able to continue trading, but as of today it has withdrawn its appeal, meaning it can no longer trade.

David Fisher, OFT director of credit, said, “Removing MCO’s licence is a timely reminder that payday and other lenders risk losing their licences if they engage in unfair business practices.

The way MCO chased consumers for debts they did not owe was unacceptable and caused unnecessary distress to many people.”

Gillian Guy, chief executive of Citizens Advice, welcomed the decision. “Citizens Advice has helped lots of people who were caused significant distress at the hands of MCO Capital Limited’s unfair practices including those who were chased for loans they never even had,” she said, calling it a victory for consumers.

The decision will come as a warning to rival firms that the OFT will carry out its threats against lenders if they fail to listen to recommendations on ways to improve their practices.