
Wonga is betting that computers are better at lending than banks - pbj
http://blogs.forbes.com/parmyolson/2011/03/15/the-algorithm-that-beats-your-bank-manager/
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stusmith1977
They're a deeply sleazy company, along with lenders like PayDayUK.

They mass-cold-call people asking to "discuss their application for a loan",
when those people haven't made an application.

They send threatening emails to folks saying that loan installments haven't
been paid, when those people haven't taken out a loan.

Their tactics are basically bullying and fear.

(No, I haven't ever taken out a loan with either of these companies. Yes I
have had to experience both of these annoyances. Yes, so have various other
people I know).

~~~
ig1
Have you checked your credit record? - it doesn't seem to make sense to
pressure someone who doesn't have a loan, it seems more likely that someones
commited identity fraud and used your details to get a loan.

~~~
stusmith1977
I don't think so, because it never goes any further than those initial
harrassments. If someone had got a loan in my name, I think I would have
received escalating demands, culminating in a court summons. That never
happens - they just keep calling wanting to discuss a loan application, or
sending emails saying that a payment is overdue.

I suspect they hope that they can just get people to talk to them, and then
convince them to take a loan.

If it is "honest" identity fraud, then they obviously don't have the checks in
place to deal with it - either way, they're not good companies to deal with
(IMO).

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binarymax
I saw an advert for Wonga the other night and noticed the fine print >4000%
APR and almost fell out of my chair. The article explains it though, and I'm
less concerned for clueless borrowers running up 40k in a year :)

~~~
sethg
If I needed $750 more than I had in the bank, and knew I could pay it all back
in a month, I would put some of my expenses on plastic. Back when I was fresh
out of school in a not-very-well-paying job, and _had recently completed a
debt management plan to pay off the bills I had run up as an undergrad_ , I
got plenty of unsolicited offers for credit cards; eventually I had something
like a total credit line over $10K with interest in the 20–25% range.

So who are these people out there who “need” short-term credit so badly, and
yet can’t find anyone to loan to them at anything short of quadruple-interest
rates? Is it really good for society to have a company fill this “need”?

(Just to forestall flag-waving about contracts between consenting adults being
sacred: The banking system, without which easy credit would be impossible, is
even more dependent on the state than other kinds of private industry. As the
de facto lender of last resort, the state has a legitimate interest in what
kinds of lending it permits among its citizens.)

~~~
VladRussian
they prey on the people like a single mother of five trying to make to the
payday and who isn't in the state of mind to do the math or other people in
the similar "impaired" [for the lack of a better word as i don't mean narrow
drug/alcohol impairness] state of mind.

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ladon86
My friend's sole trading business has an 0845 number which goes straight to
voicemail.

On day, he started to receive truly heartbreaking messages of financial
hardship, people unable to pay medical bills for their parents, that kind of
thing. People were literally crying on his voicemail.

It turned out that his number was just a few digits different from the new
Wonga customer service line, and he had to change the number.

~~~
mootothemax
_people unable to pay medical bills for their parents_

Are you sure about that? I don't want to move the conversation anywhere near
healthcare controversy, but the joy of the NHS is that "I can't pay medical
bills!" problems never exist :)

~~~
ladon86
Sort of, but there is a grey area between what people think they need and what
the NHS thinks is necessary.

My mum is a head nurse and has to fill out a 10+ page assessment of the
patient's needs which determines what level of at-home care the NHS will
provide.

Often, the family will fight this ardently because it might mean they have to
pay for a care home or a private carer. These things aren't always provided by
the NHS if certain conditions aren't met, and with the recent cuts, or threat
of cuts, the bar for care is being set higher.

In this instance, perhaps someone foolishly took out a Wonga loan to pay for
their parent's care, or perhaps it was just a sob story all along.

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mbesto
Maybe I'm not the right customer but I don't really see the value.

From the frontpage, they give me £265 today and expect me to pay £294.51 9
days later. With my credit card I get £265 and pay £265 anywhere between 1-30
days later.

Still confused? Is it only for people who can't get a £1000 line of credit?

~~~
citricsquid
Not everyone has access to a credit card and some don't like the
responsibility/risk associated with them, also some people may have reached
their limit if they do have one.

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VomisaCaasi
I'm glad these guys didn't base their business idea on not primarily
concentrating on customers who won't even have a chance to pay their loans
from the beginning.

Here in Estonia, some entrepreneurs thought it was nice to mix up text-ing
from cells and lending as far back as 2006 already (I think). Basically,
you'll only need to provide your personal info with their site (name, Estonian
version of SSN, bank account, telephone number), and then you'll be able to
get a loan for as much as €1000 by just sending a sms. Most people lose their
judgement after few shots of vodka, now imagine if you ran out of money after
those two shots and the only thing needed to fix that was to send a SMS.
Something that the provider won't be telling you, however, is that those loans
come with high interests, sometimes as high as 1000% / year. As a result of
that, quite a bunch of uneducated people have lost their homes due to this
scheme that still is going on today in our unregulated economy. Seems as if
they've now began tapping Swedish market, I wonder when is this going to
happen in the U.S.

All in all, I was a text-book liberal before seeing some of the people dealing
with results caused by this scheme, now I'm beginning to change my mind.

Also, there's a Wiki page about it:
[http://translate.google.com/translate?js=n&prev=_t&h...](http://translate.google.com/translate?js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&sl=et&tl=en&u=http%3A%2F%2Fet.wikipedia.org%2Fwiki%2FSMS-
laen)

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VladRussian
typical pay day loan shark would charge "outrageous" 300%-1000%, yet they
would loan pretty much to anybody, including very high-risk borrowers.

Wonga wants 4000% for loans to the top 30% applicants. Nice try.

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jrockway
This company is evil, but something I've always wanted to do is start a
deposit bank where all the account decisions are made by algorithms. When a
customer emails with a problem, an algorithm analayzes the message and makes
the appropriate decision (refunding fees, chargeback, etc.) The amount of
money saved by not having any customer service people would allow the outcomes
to be more customer-favorable (sure, we'll refund that) without affecting
profits.

(The prerequisite I'd need to get started with this is an archive of emails-
to-the-bank with their outcome.)

~~~
VladRussian
basically you want to start a typical bad bank where one would spend half-a-
day trying to get through the menus to solve a simple account mistake/issue

~~~
jrockway
No, there are no menus. "Click here to email customer service." The software
handles the rest.

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gte910h
How right do you have to be when running a payday loan scam?

~~~
citricsquid
Since when have payday loans been a scam? That's a very silly view and in my
opinion doesn't fit the entrepreneurial _spirit_. Payday loans are valuable to
a large number of people and a large number can and do handle them
successfully. It's not a _scam_ , it's just easy to screw up with.

is gambling a scam? are mortgages a scam? are "normal" loans a scam? are vc
investments a scam? etc etc

~~~
bendmorris
If you're responsible but low on funds, payday loans can be a godsend. The
interest is often lower than your checking account's overdraft charge, for
example. If I was short between paychecks, I'd get charged $20 for each bill I
have set on autopay.

~~~
jrockway
Or you could just not pay the bills.

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Estragon
Only for the UK, at this stage. No way to enter a US work phone number.

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plnewman
"Wonga"

I never would have learned that word without Damon Hill.

