Wonga, the UK’s most popular lender, is considering changing its name and re-branding in a measure to start all over and get rid of the Wonga name. Wonga chairman, Andy Haste, was brought in to rebuild the company and help the company to improve its reputation after being brought to its knees in 2014 with a scandal that tarnished the payday loan market further.
Wonga’s Troubling 2014
In 2014, Wonga were involved in one of the biggest scandals in payday industry. Wonga were accused by the FCA of sending out fake legal letters to get outstanding loans paid back by customers. These letters were sent between October 2008 to November 2010 and as a result of the investigation Wonga was ordered to pay £2.6m in compensation for conducting an illegal practice and using scare tactics that were not ethical
Further trouble followed in 2014 when Wonga admitted that they were handing out loans to customers without conducting proper checks. As a result of the investigation, they wrote off 220m loans from around 350,000 customers severely denting their profits and reputation.
Why Wonga Are Considering Changing Name
Changing the Wonga name is just one of number of changes the company want to pursue. In December, Wonga started trialling a low-cost loan to see how well customers deal with the new loan product. There are a number of reasons why Wonga would want to change its name and here are a few reasons we think why:
- With Wonga spending so much on advertising over the years they have become a very well known brand and and now may have backfired because when people think of payday loans nowadays there is a high chance they will think of Wonga and all the bad press they have received
- A name change may result in an increase in customers. Customers will think they are dealing with a different company when in actual fact it could be Wonga but re-branded
- Wonga may have also noticed that more and more customers are searching for loans like Wonga meaning that if customers who do want to get a payday loan they would rather take funds from an alternative company than Wonga as people have the perception they don’t treat their customers right
Can Wonga Recover
With profit results taking a battering since 2013, Wonga is probably still the biggest lender in the UK and it is hard to say if they will keep sinking or stay afloat. Wonga’s success and been their downfall boasting massive profits in the early years and now when the payday loan industry is scrutinised, Wonga seemed to be involved or mentioned in bad press reports as they have become such a big brand.
The name change may boost customers for a short while but when people realise they are dealing with Wonga they may think twice. Whatever the name change is it is still the same Wonga company and it may be best for them to follow regulated practices and treating customers fairly and hopefully show customers they are a responsible lender, not a company trying to hide away behind another name.