Targeting unlicensed money lenders
Common myths about loan sharks
There are lots of rumours and myths around loan sharks and what they do. These are some of the most common ones, along with the truth.
The myth: 'Unlicensed
money-lending is not illegal'
The truth: It is illegal for anyone to operate a
money-lending business if they don't have a licence
for this from the Office of Fair Trading
The myth: 'If you borrow money from a loan shark,
you are breaking the law'
The truth: It's the loan shark who is breaking the
law - not the person who has borrowed the money. You
can't be prosecuted for having taken a loan from a
loan shark
The myth: 'You have to pay back what the loan
shark says you owe'
The truth: Any loan made by someone without a
licence is 'unenforceable' - this means you cannot
legally be made to pay it back
The myth: 'Illegal money-lending is a victimless
crime'
The truth: Those who have borrowed money from
illegal lenders are often threatened and intimidated
into paying back much more than they borrowed. Whole
communities can be affected if borrowers are forced
to turn to crime to pay back out-of-control loans.
Loan sharks are also often involved in other crime
The myth: 'Loan sharks are providing a reasonably
priced service to people who need it'
The truth: A loan from a loan shark is, on average,
three times the cost of the same loan from someone
operating legally. Interest rates of between 8000%
and 117,000% have been uncovered
