Loan sharks may seem like menacing villains, but the reality is different from the popular image. Unlike some stereotypes, encounters with shady individuals at pubs or cigar-smoking organized criminals are rare. After all, most of us can spot trouble coming!
Ironically, people often fall into the trap of borrowing from illegal lenders because they initially appear friendly. Loan sharks are more likely to be colleagues or friends. According to recent research by the Illegal Money Lending Team, 56% of loan shark victims initially considered their lender a friend, while approximately one in ten had met them at work.
Case Study: The Deceptive Faces of Loan Sharks
At a hospital in Kent, Malai Gambrill was considered a friend by many of her colleagues. Known for lending money to staff in need, she lent £3,000 to one colleague. They agreed to pay her back £100 plus £5 in interest every month. Over the next three years, the victim paid Malai a total of £4,650, only to be told they still owed the original £3,000. When the victim confronted Malai, it was her word against hers, leading the victim to report the incident to the police.
When the police caught up with Malai, it was revealed that she had lent over £80,000 to colleagues, charging interest rates of around 60%. Malai might not fit the typical image of a loan shark, but cases like this are not uncommon. In 2016, consultant Dr Arjan Damjibhai Savani was convicted for lending over £1 million to low-paid colleagues at Northwick Park Hospital. He relied on shame to pressure them into making repayments they couldn’t afford.
The common thread is that loan sharks frequently exploit their colleagues’ trust to manipulate them into accepting predatory terms. The friendly façade makes it challenging for victims to recognize the danger until it’s too late. It’s crucial to understand that loan sharks can take on any guise, even that of a trusted colleague or friend.
How to Identify an Illegal Loan Shark
Initial Friendliness
Loan sharks stand out for their approachability and seeming trustworthiness. They could be a friend of a friend or introduced by a colleague. Initially, they offer help with friendliness and a genuine willingness to provide financial assistance. However, once borrowers are entangled, things can quickly turn dark.
Turn for the Worse
Once trapped, loan sharks reveal their true colours. They can impose exorbitant interest rates and extra ‘fees’, leaving borrowers drowning in debt. They may also change the terms of the loan without notice, or add new conditions as they go along – after all, without a legal loan agreement, it can feel as if it’s your word against theirs. The transition from friendliness to cruelty can be shockingly fast. Things can sometimes progress to threats or violence (either real or implied). But even if they don’t, it’s common for them to exploit your sense of shame, embarrassment, loyalty or guilt in order to keep you under their control.
Reporting It
Remaining vigilant for warning signs is crucial in identifying loan shark activity. Unusually high interest rates, lack of paperwork or agreements, and feeling threatened or fearful when dealing with them should all raise red flags. Trust your instincts, and if something feels off or too good to be true, recognize the potential danger behind the friendly facade.
If you’ve borrowed money from a friend or colleague, it may be difficult to see it as a crime until it’s too late. Lending without proper authorisation from the Financial Conduct Authority (FCA) is illegal in the UK. As a victim, you won’t get into trouble. You can report a loan shark safely and anonymously by calling 0300 555 2222 or emailing [email protected].
Spread the Word about Credit Unions
Fortunately, there are legitimate alternatives to borrowing from loan sharks if you find yourself in need of emergency cash. As a credit union, we’re here to help you make the most of your money. Our range of loans offers clear and fair rates of APR, even if you’re unemployed or on a low income. Most importantly, we are authorized by the FCA, ensuring that everything is above board, and your rights are protected.
Our Borrowing Options for the Unemployed or Those with a Low Income
