Shame, fear, embarrassment – it is these raw feelings that can lead people into the clutches of loan sharks.
And it’s that same trio of emotions that can keep them in their grip, sometimes for years.
Experts say the tough-man image of a loan shark is outdated and unnecessary.
Most often, illegal money lenders are people already known to the victims.
It could be other drinkers in their local pub or a mother on the doorstep of school offering to help someone out of a difficult situation – then threatening to publicly shame the victim .
As it was time to pay, the debts got out of hand, sometimes reaching hundreds of thousands of pounds.
Paralyzed by debt and frightened by the consequences, some victims were even forced to commit suicide.
This is a rare but devastating side effect of illegal money lending.
More often, however, victims turn to shoplifting, prostitution, or even the maintenance of cannabis farms in an attempt to repay their debts.
Experts now fear that people who find themselves in financial difficulty after the coronavirus lockdown may be threatened by new loan sharking tactics.
A recent All-Party Parliamentary Group (APPG) investigation into alternative lending found that post-Covid illegal lenders are using new methods to target people.
Snapchat and WhatsApp are regularly used to contact vulnerable people, and one in five victims met their lender via social media in the first half of 2020.
As the economic effects of the pandemic begin to be felt, experts say it is not out of the question that more people are turning to loan sharks.
But it takes an average of three years for a victim to seek help after borrowing from a loan shark – so it’s impossible to know for sure whether the coronavirus is already paying into the pockets of these illegal lenders.
Cath Williams of the England Illegal Money Lending Team (IMLT) explains: “Some people call the hotline and say they have been with a loan shark for years and have never had a problem and now they have lost their jobs and they have become mean.
“I’m sure as the places come out of lockdown the loan sharks will return to collect again.”
“A lot of people have lost their jobs or have zero hour contracts – their situation has changed.
“When evictions come back, people can borrow to avoid being evicted. And as debt collection starts all over again from legitimate companies, it puts people under pressure. “
The IMLT has supported over 30,000 people and canceled over £ 83million in illegal debt.
But it is not always easy to reach the victims.
“We get calls from victims, but the tragedy is that it’s usually when they’re in crisis,” says Cath.
“They call us when they get to the point where they can’t take it anymore.
“A lady, her son had borrowed £ 9,000 and he had to repay £ 16,000. He managed to repay £ 8,000 and to help him his mother remortgage the house.
“She called us to make sure she hadn’t broken the law.
The APPG report on the investigation into “Post-Covid loans and borrowings” says there is a “consistent message” about the risk of increased illegal lending due to Covid.
“Job losses and stricter underwriting policies create perfect conditions; Lending business closures and new forms of illegal lending online dramatically exacerbate the threat, ”it read.
During a hearing, Tony Quigley of England’s Illegal Money Lending Team said his team saw a reduction in the number of people coming in contact during the Covid crisis.
“He anticipated an increase in illegal lending after Covid, with higher unemployment and greater loan defaults creating the necessary conditions,” the report said.
“His team was aware of new forms of illegal lending online, as well as upfront cost extortion, identity theft and the connection to organized crime.
“Before, illegal loans were a face-to-face affair; it still is, but it is also going digital with some “illegals” even using Facebook and WhatsApp groups. “
Experts say stereotypes of loan sharks are unnecessary and can help keep the problem out of sight.
Although there are incidents of violence related to illegal loans, the tactics tend to be more insidious.
Usurers will play on fear, shame and family loyalty to extract huge sums of money from their victims.
“There is a wide range of illegal lenders,” says Cath.
“The stereotype was a big Phil Mitchell-type guy with a baseball bat and henchmen kicking down your door. We don’t really see that.
“We don’t see as many threats of violence. It is more complete control and an attack on people’s self-esteem.
“So maybe their partner doesn’t know about the loan and the loan shark says he’ll tell them.”
“Or they will threaten to tell others so that there is shame in the community.” Threatening to go see their employers and tell them “beware, he owes me money, he could have his hand in the cash”.
“They attack people’s vulnerabilities.
Illegal lenders are known to target specific communities or groups.
In 2016, Dr Arjan Savani exploited colleagues working at Central Middlesex and Northwick Park Hospitals in Harrow, by lending them money at interest rates over 600 times the base.
The consultant – who worked in the hospital’s A&E department – loaned tens of thousands of pounds to hospital workers, mostly Filipinos, at interest rates ranging from 1.5 to 8% per month.
He made up to £ 287,000 in interest profit, none of which was reported to the tax authorities.
Savani, then 49, was sentenced to 10 months in prison, suspended for two years and ordered to perform 120 hours of unpaid work after admitting two counts of illegal money lending.
Following a hearing at Harrow Crown Court, he was ordered to repay £ 525,000 in proceeds of crime.
Cath says some immigrant workers who have fallen prey to loan sharks have been threatened by lenders who say they will tell their families about their debts.
In other cases, violence – or simply the implicit threat of violence – may suffice.
“Years ago we had a boy who was attacked for making his face bleed and driven around the grounds as a warning to others,” says Cath.
“Or the lenders will imply that there is someone else behind it – a grim ‘Mr. Big’ figure.”
“They will say that they are your mate and that they are trying to drive him away, but you have to pay.”
A woman who borrowed £ 50 for school uniforms ended up paying back £ 35,000, says Cath.
“She didn’t have any money, so she had to borrow more.
“A mate loaned him the money and there was a fake ‘Mr. Big’ character in this business.
“These kinds of threats never date.
“They’ll say things like, ‘Does your mom have money? Because we have to keep this guy away from the kids.
In desperation, some victims themselves turn to crime to pay off their debts.
Some have been forced to grow or care for cannabis plants to erase the slate.
While some women have been offered the opportunity to “remunerate in kind” through sexual favors or work in the sex trade.
“I think this happens more than we think,” says Cath.
“Shoplifting is the most common thing we see.
“Sometimes the loan shark will give people a shopping list of things they want them to steal.”
Cath insists that anyone can fall prey to a loan shark, and recent research from the IMLT found that men are just as likely to borrow as women, 20% of victims were homeowners and over 50% were employed.
“We found that the profile of victims had changed dramatically,” says Cath.
“The victims are neither stupid nor greedy. The vast majority pay to borrow for everyday things like food or the phone bill.
She adds, “A lot of people have no idea that they are borrowing from a loan shark. They think it’s Bob from the pub they’ve known for 20 years, or a neighbor. They just think it’s a loan from a buddy.
“Some people come to them because they couldn’t get a loan elsewhere, but more often than not, they don’t even realize they are borrowing from a loan shark.
“They’ll say ‘I thought it was someone I knew and he said it was’ double bubble’ but he added £ 80 interest a day. He hasn’t mentioned it before. ‘.
During the lockdown, the IMLT launched a live chat feature on its website to encourage people to report illegal loans.
Its success is such that it will now become a permanent feature of the site.
The team of investigators and financial officers work with local authorities, police and housing associations to gather intelligence and identify loan sharks and victims.
Police arrested seven suspected loan sharks in dawn raids in Oldham last month.
The team executed warrants at six addresses in the Coldhurst, Fitton Hill, Greenacres and Holts areas of the city and seized documentation and electronic devices.
At the time, Oldham Councilor Amanda Chadderton warned residents that turning to loan sharks for help “could end up costing you dearly for years to come.”
“The coronavirus has had a huge financial impact on Oldham and many of our residents, through no fault of their own, have been hit hard in the pocket,” she said.
“Unfortunately, loan sharks will try to take advantage of any situation to prey on people, especially the vulnerable.
“They then continue to rob their victims, often using intimidation and violence.”
To report a loan shark, call the confidential 24/7 hotline on 0300 555 2222, email [email protected], or use the online report form here.
Live chat is open 9 a.m. to 5 p.m., Monday to Friday.