The payday loans market has been slammed for being rife with poor practice, following a new investigation by Which?.
Potential breaches of the Consumer Credit Act, poor privacy provisions and inflated APRs were all uncovered, while two lenders have been reported to the Office of Fair Trading (OFT).
Which? said Paydaykong.com appeared to be operating without a valid Consumer Credit Licence, while Swiftmoney.co.uk failed to show the APR for its loans anywhere on its website.
Casheuronet UK, which operates Quick-payday.co.uk, and Quickquid.co.uk, has also been reported to the Information Commissioner's Office after the investigator received dozens of unsolicited third party emails and phone calls in the days following his application.
This was despite the lender's assurance that it does not sell customer details to third parties.
Other examples of poor practice included potentially misleading claims about APR, firms encouraging customers to borrow more than they need and to rollover existing loans for several months.
Several firms were also found to have lax website security, with one provider requiring customers to enter their bank details on an unsecured page.
The take-up of payday loans is on the rise, even though providers typically charge from £20-£35 for a short-term £100 loan.
The most expensive Which? found was offered by Wonga.com, which quoted £36.72 for a 30-day loan of £100 - equivalent to an APR of 4,394%.
The same amount borrowed through an authorised overdraft from the Co-operative Bank would cost just £1.35.
"Payday loans might seem like a good solution for people whose money won't stretch to the end of the month, but they should be treated as an absolute last resort," said Which? executive director, Richard Lloyd.
"They can be an incredibly expensive way to borrow and we've uncovered a long list of poor practice by lenders.
"A temporary overdraft extension can be a much cheaper, safer way to borrow so if you're struggling to get to pay day then the first thing you should do is talk to your bank.
"With increasingly squeezed household budgets, more people are taking out payday loans so it's vital that regulators keep a close eye on providers and deal firmly with any lenders breaking the rules."
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