Cash-strapped Farepak victims are being targeted by unscrupulous loan firms cashing in on heartache, an MP warned today.
Hard-up families facing a bleak Christmas could be fleeced of their remaining cash by signing up for loans at exorbitant rates of interest.
Caerphilly MP Wayne David is urging anyone looking to take out a loan to use local Credit Unions which offer ultra low interest rates.
He fears vulnerable people who lost out when the Farepak savings scheme collapsed could otherwise be plunged into a cycle of debt misery.
“It is a very real concern and people are certainly being approached in Wales,” the Labour MP warned today.
“Loan companies are certainly targeting people that they believe have had dealings with Farepak.
“They are not advertising as such, it is being done by word of mouth, but the sales people tend to work door-to-door anyway.”
He added: “I am careful to say that what these companies are doing is not illegal – but it is certainly immoral.
“If they genuinely wanted to help these people they would direct them to the nearest Credit Union.”
He said he had been approached by a concerned local branch of the Citizen’s Advice Bureau operating in Bargoed, in south Wales.
It is already a community which has problems with loan shark companies preying on the poorest families, he said.
He added that former Farepak customers living in the town are now being sought out as ideal candidates for high interest loans.
He warned that some rates of interest are as high as 100%.
“People would have to pay back a heck of a lot of money over the coming weeks and months,” Mr David said.
He said that as far as Wales was concerned the Welsh Assembly Government had offered to underwrite loans to former Farepak customers.
He said for such families joining a Credit Union the stipulation that they must be a member for some time before being eligible for a loan had been waived.