Malai Gambrill seems like something other than the typical loan shark. She was an older woman in her 50s who worked in the hospital of Gillingham near London. She loaned PS3,000 to her friend and colleague because they would repay it monthly and pay an additional PS5 for every PS100 outstanding.
The borrower repaid PS4,650 over almost three years, then was informed that they still owed the sum of PS3,000. After that, they went to the police. The home of Gambrill was searched, and police found out that she ran an entire loan and money lending company in addition to her other business.
Atypical for this type of procedure, Gambrill was not threatening her victims with physical violence, which might be the reason she was handed an indefinite jail sentence, suspended, and was only required to complete 150 hours of work that was not paid. However, she is part of a much broader problem in the UK and elsewhere that has almost certainly worsened during the current cost-of-living crisis.
There are few banks and building societies willing to provide loans to people who are already struggling with financial hardship, and there needs to be more awareness about alternatives such as financial institutions. This is despite all the talk regarding the significance of having access to an array of financial services as part of the policies designed to enhance financial accessibility. Many struggling people end up having no choice other than to seek assistance.
The magnitude of the issue
An OECD research study conducted in 2020 discovered that, in a typical survey of 25 countries, 43% of those who faced an unexpected financial crisis were “borrowed informally.” Many people borrow from genuine relatives or friends, but numerous others have fallen prey to loans from loan sharks.
In the words of the Center for Social Justice, over a million are currently paying off illegal loan lenders for money in England by themselves. It is fantastic; it is more than one in 50 adults.
The Illegal Money Lending Team (IMLT), an agency of the government that encompasses England and Wales, is a source of data that helps to understand the extent of the problem. The data is not published but is made available to partners and academics such as me. The data indicates that borrowers are a mix of young women and men, to those over 80. Nearly half of them are employed. Most suffer from anxiety, stress, or depression, as well as 14% have tried the suicide route. The average sum they borrowed for 2022 was PS500. However, the amount that was repaid in the median was PS4,500.
Similar to the situation of Gambrill, the loaner usually does not appear to be a loan shark from the beginning. Up to five percent of the victims thought of their lender as someone they knew, while 10% had encountered their lender at the workplace. However, these seemingly friendly faces soon be manipulative and may threaten to humiliate or even harm the borrower or their family members in the event of late payments.
The victims do not have a savings account, as 79% of them are owed money by other lenders. Most loans are used to pay household bills, which clearly illustrates the effect of the cost-of-living crisis.
In addition, about half of the victims have been threatened with physical violence. Other forms of extortion, such as blackmail, are also prevalent.
One person who borrowed funds from loan sharks told the ImLT in 2022:
The boyfriend was terrified and said he would charge me an additional PS20 each day for a penalty. The couple repeatedly knocked on my door each day to demand payment. Over seven months, I repaid more than P4,000. I was stressed and could not leave my house for over two months. I could not sleep. I sold precious jewelry to me – gifted by my deceased husband – but I was owed PS3,000.
However, on average, most victims are waiting two and a half years before seeking assistance.
What is the best way to do it?
Everyone has a part to play in preventing others from becoming victims of such activities. It is essential to be vigilant about the possibility of lending to informal people around us at the workplace or in our communities and make sure to report any suspicious activities.
If you are at risk of becoming a victim to loan sharks, these tips can be helpful:
- If you are considering borrowing money from someone you know, consider other alternatives. Contact the local branch of your credit union. If you have trouble paying for your financial issues, contact Citizens Advice or StepChange.
- Anyone who lends money to make a profit without a credit card license for consumers violates the law, but taking out a loan from an individual who is a loan shark is not legal. Therefore, you will be safe if you seek advice after getting a loan. Contact to stop Loan Sharks, a service offered by the IMLT.
- If you believe a loan shark is victimizing you, you likely are. If you owe much more than what you borrowed from someone who still needs to provide a written contract (or offered one that’s not likely to be legally valid) and need help, get it. This is also true for those who do not know when they will be free of debt or who are intimidated, pushed or threatened, or forced to sign an ID to secure the loan.
- When your health and mental well-being is in danger, or you feel suicidal, do not be afraid to talk to someone like Samaritans. Samaritans.
