Hundreds of thousands of Scots at risk of falling victim to loan sharks in run up to Christmas

It is warning that illegal lenders are increasingly using social media platforms, such as Facebook, Instagram and Snapchat, to advertise their high-interest loans and target potential victims.

In some shocking cases, loan sharks have been found to be targeting the social media pages of local food banks to take advantage of people while they are at their most desperate.

SIMLU, which is part of Trading Standards Scotland, works in partnership with other agencies and organisations to help eradicate the scourge of loan sharks and is now in its 20th year.

It is urging people to be aware of the risks posed by illegal moneylenders, especially in the build up to Christmas, and to report them through its dedicated helpline and online portal, as well as seeking help if they have fallen victim.

A ScotPulse survey of 1,113 Scottish adults, commissioned by SIMLU, found that 7 per cent have encountered a loan shark either in their community or online.

Across the wider population, this equates to around 300,000 people. Of those who came across a loan shark online, most had seen them via social media or on WhatsApp.

On average, loans from illegal lenders end up costing three times as much as legal loans. Although loans from community-based lenders may be seen as a quick solution for those in crisis situations, these lenders may not be authorised by the Financial Conduct Authority and could charge exorbitant interest rates.

In one disturbing case, SIMLU was contacted by a single mother from Glasgow who borrowed £250 from a loan shark to pay for a new bed for her toddler son last year.

The illegal lender began charging her £25 in interest every fortnight, which she was initially able to pay.

But when she missed a payment after Christmas so she could afford to top up her prepayment meter to keep the heating on, he told her she would have to pay double the next week.

When she failed to attend their next meeting to pay him, he came to her door and threatened to assault her and harm her son.

Once his actions were reported, officers from SIMLU were able to help the woman access a local food bank, receive debt and welfare advice, find support groups, and arrange a volunteering opportunity.

SIMLU’s advice is never to borrow money from an illegal lender. Those who have done so should not feel guilty or ashamed because the loan shark is the one committing the crime, not them.

Anyone who has fallen should not suffer in silence. They should seek help from SIMLU by reporting their experiences through its online form or by calling its dedicated phone number.

The free and confidential helpline for those in financial difficulties is available on 0800 074 0878 and will remain open 24/7, including over the Christmas period.

The organisation is also advising people to look out for family, friends and neighbours who might have fallen victim to a loan shark, and to contact SIMLU on their behalf if they are worried.

It is very important that suspected loan sharks are reported to SIMLU, so its expert team can investigate and bring offenders to justice, preventing others from being exploited.

The SIMLU is part of Trading Standards Scotland and is funded by HM Treasury through the levy placed on authorised credit businesses by the UK Government.

As part of its work to prevent people falling victim to illegal money lending, Trading Standards Scotland is this week launching three financial literacy projects in different parts of the country.

One is being run by the charity Scottish Women’s Aid, with the aim of increasing and protecting women’s financial independence and researching the issue of ‘coerced debt’ among domestic abuse survivors.

Another project will be led by the Lothian Centre for Inclusive Living in Edinburgh, providing financial workshops for disabled people and those living with long-term health conditions.

The third project, called Saved by the Bell, is a financial education programme that aims to reduce poverty by advancing financial literacy among school pupils in Dundee.

Fiona Richardson, chief officer of Trading Standards Scotland, said: “It is truly shocking that loan sharks are seeking to take advantage of the cost-of-living crisis by targeting people who are struggling to pay their heating bills and put food on the table.

“The Scottish Illegal Money Lending Unit has handled some terrible cases where people have been enticed into borrowing money only to find themselves threatened with violence when they cannot meet sky-high interest repayments.

“In the build up to Christmas many people will feel under pressure to spend money, but the dangers of borrowing from unauthorised or informal lenders cannot be overstated.

“Our advice is to never borrow from a loan shark, but if you have done or even if you are thinking about doing so, please come to us so our experts can help you.

“SIMLU has been investigating and bringing illegal lenders to justice for 20 years, and the more people who report such crimes the less chance there is of others falling victim.”

Scottish Secretary Ian Murray said: “The tactics used by these unscrupulous illegal money lenders are alarming, and I welcome the work of Trading Standards Scotland to warn vulnerable people of the risks.

“I’d urge anyone who has fallen victim to the criminals peddling these illegal inflated loans to contact SIMLU so that they can get help and advice and also so these loan sharks can be stopped.

“Taking action to reduce poverty is absolutely central to the UK Government’s mission to drive economic growth. We’re making work pay, ensuring the national minimum wage is a true living wage and ending exploitative zero-hours contracts so workers have increased job security.

“We need to put a stop to criminals who prey on people who are struggling financially when they are at their most vulnerable.”