Wikipedia
Wonga.com (a trading name of WDFC UK Limited) is a British payday loan company offering "short-term, high-cost credit". The interest charged by the lender, which can equate to an annual percentage rate (APR) of 1509%,. Wonga have said that they believe that APR is a poor measure of the true cost of short-term loans. As of April 2016, a loan of £100 over seventeen days (Wonga's average loan term) required £113.60 to repay. Wonga is a slang term of Romany origin for money, used in some parts of Britain since the 1980s.
The firm operates in the UK, South Africa, Canada, Spain, Germany and Poland. The company invented fully automated risk processing technology to provide short-term, unsecured personal loans online, including via tablet and mobile app. The service was launched in October 2007. The firm was the first to provide an instant lending application on the iPhone.
Consumer credit suppliers were regulated in the UK by the Office of Fair Trading (OFT) until April 2014, and then by the new Financial Conduct Authority (FCA). The firm's lending practices have been controversial, and they have been criticised in Parliament and by the regulators, media and religious sources. In 2014 the firm was ordered by the FCA to pay compensation of £2.6m to borrowers for bad debt collection practices, including in 2010 sending and charging for letters purporting to be from law firms (which did not in fact exist) threatening legal action. The newspaper The Guardian quoted the head of the Law Society as saying that Wonga's activity, which he qualified as dishonest, could amount to blackmail, deception, and other breaches of the law. A formal police investigation for fraud was being considered .
On 30 September 2014, Wonga announced that its profits for the year to the end of December 2013 had fallen by 53% to £39.7 million. The company blamed "remediation costs" – compensation paid to customers – which in total cost the company £18.8m. Wonga also said it expects to be "smaller and less profitable" in future, in part due to new controls set by the regulator, the Financial Conduct Authority (FCA). Since July 2014, all payday loan companies have had to conform to new rules, which limit roll-overs of loans and force them to increase affordability checks. From January 2015, they were also to have their charges capped. On 2 October 2014, Wonga agreed to write off the debts – thought to total £220m – of 330,000 customers who were in arrears of 30 days or more. This was a direct consequence of discussions with the Financial Conduct Authority (FCA).
Wonga saw losses more than double in 2015 as tougher regulation of the payday loan sector led to a sharp fall in the number of loans taken out by UK consumers; the business reported a pre-tax loss of £80.2m for the year – up from £38.1m the year before. After tax, the company lost £76.5m, versus £43.6m in 2014. The UK remained a core part of the business - as of 2013 customers in the UK accounted for 3.8m of the 4m loans it granted. The drop in revenues was driven primarily by a new price cap and stricter criteria set by UK regulators.