Payday Lender MCO Capital has had its company closed down by The Office of Fair Trading after it failed to stop fraudsters taking out loans using more than 7,000 stolen identities.
The OFT said the payday lender had inadequate identity checks for loan applicants, which led to MCO being targeted repeatedly by fraudsters.
In 2010 individuals submitted crime reports to Action Fraud about letters received from the lender demanding payment for loans they had not taken out. The reports Action Fraud was able to collect were fed into the National Fraud Intelligence Bureau (NFIB) which resulted in City of London Police commencing an investigation.
The OFT said that they had ignored repeated requests to stop the practice after it was clear that they were running an unfair business.
The closure comes after the regulator warned the top 50 biggest payday lenders that they had just 12 weeks to improve or face being closed down.
David Fisher, OFT Director of Credit, said: "The way MCO chased consumers for debts they did not owe was unacceptable and caused unnecessary distress to many people."
Gillian Guy, chief executive of Citizens Advice, said: "It is a victory for consumers that this payday lender has been forced to stop trading today. We hope the OFT's current 12-week deadline will put pressure on the industry to clean up its act and treat its customers fairly."
For further information visit The Independent's website.
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To report a fraud and receive a police crime reference number, call Action Fraud on 0300 123 2040 or use our online fraud reporting tool.