More than two million Britons may be in debt to illegal lenders as families battle the cost of living crisis. The number of people indebted to “unscrupulous” lenders has soared by 500,000 since 2022, according to the Centre for Social Justice (CSJ). It warns 66% met their “loan shark” through friends or family; 60% considered the lender a friend before borrowing; and 28% were threatened with social media shaming.
In a worrying new trend, one in three people found the lenders using social media, research by Fair4AllFinance found. A Channel 4 Dispatches documentary, Hunting the Debt Predators, will tonight detail how sexual predators target women with money problems online and attempt to get intimate pictures and videos in exchange for cash.
There is concern that people whose credit scores stop them getting traditional loans are using social media to ask for money from unlicensed lenders. According to the Financial Crime Lab, these charge an average interest rate of 25% – and sometimes as much as 50%.
Criminologist Nicola Harding said: “Illegal lenders might ask for your data: your name, date of birth, where you live. Data is currency in the criminal world and allows criminals to open bank accounts and even companies in your name, which they can then use for illegal activities… You have normal, hardworking people, who are now indebted to criminals.”
According to the CSJ, the most common reason for borrowing from a loan shark was to “cover essential everyday costs such as groceries and household bills”. Other reasons included “supporting family members, paying for funerals and weddings, vehicle repairs and business expenses”.
The think tank’s Ben Gregg said: “Hundreds of thousands of people are borrowing from illegal lenders, often with little to no idea that their creditor is acting illegally. Many consider unlicensed lenders to be friends and members of their community and continue to repay their debts even after loan sharks have been arrested.”
The research illustrates the difficulties Britons face as they struggle with high living costs. A nurse who earns £36,000 and works as a “full service escort”, told the documentary team: “I just feel like I'm working all the time, like being on a hamster wheel. It's relentless with the cost of everything going up. I don't know when I could give this up.”
John Pears, UK chief executive of credit management company Lowell, said: “More people turning to loan sharks lays bare just how fragile household finances have become. Too many households are living without any meaningful financial buffer, leaving them exposed when even a smallest shock hits. If we are serious about tackling illegal money lending, enforcement alone will not be enough. We need to address the root causes that allows these lenders to exploit people in the first place. That means real, sustained action to strengthen financial resilience and ensure people can access realistic, affordable support before they are pushed into dangerous alternatives.”
Reform UK's Robert Jenrick said: “It’s disgraceful that due to the incompetence of this Labour Government, hard-working Brits are being forced into the clutches of loan sharks just to make it from month to month. Only Reform is on the side of working Britain. We will cut taxes on overtime, end the £90,000 VAT ceiling on hard work, scrap wasteful green charges on energy bills, and get the economy growing again so no family is forced to turn to illegal lenders.”
Shadow Work and Pensions Secretary Helen Whately said: “Families driven to illegal lenders are the human cost of Labour’s economic disaster. Soaring bills, rising taxes, a welfare system that traps rather than supports. In little under two years, Labour have wrecked our economy and devastated people’s finances. Desperate people are having to turn to criminals because they have run out of options. The Conservatives would cut the tax burden, bring down bills and fix the welfare system.”
Hunting the Debt Predators airs tonight at 8pm on Channel 4.
