Wonga announces record profits – but should they have them?

Carl Packman asks if we can be comfortable living in a country where Wonga makes millions.

Wonga – the controversial payday lender – has today announced record profits of £63m for 2012, or roughly £1m per week. More evidence that as financial hardship tears through many families in the UK, selling expensive loans to hard-up people is a growth industry.

Last year PwC noted in a report that between 2008 and 2010 mainstream banks lent around 50 per cent of the total stock of consumer credit. This represented a drastic cut back, despite the fact that wages were declining in this period and the small occurrence of a financial collapse.

These years were not good for borrowers on two counts: firstly it was harder to obtain credit, and second more people were unable to see their wages out to the end of the month.

While Bank of England data reveals that consumer credit has risen in recent times by 3.5 per cent, it does not follow that mainstream banks have returned to providing for local communities again. Another report by CityWire shows that some 52 per cent of the total stock of credit lent comes from "other" financial institutions – the main one being payday lenders.

It is no wonder Wonga have recorded massive profits – we live in the Wonga age.

But is it their fault? Certainly we cannot blame the company for bank failings, the rising cost of living, and declining wages, things over which they can have no effect. But they do control the way in which they sell their loans.

Reports abound of Wonga selling loans to people whose financial situation means that the last thing they need is high cost credit. I wrote in these pages about Susan, the unemployed nurse who was granted several loans by the company to pay for bills and food. At no point was she signposted more affordable alternatives or given debt advice by the payday lender.

Wonga themselves point out that they use a very sophisticated algorithm to determine who it is reasonable to lend to. But it seems there are some deep flaws with this system. This is Money earlier this year reported having spoke to 50 people who had had loans taken out of their accounts – despite those people not having applied for loans themselves. 

To illustrate how much of a problem this could be, aside from potentially losing money and the hassle, This is Money spoke to Adrian Anderson, director of mortgage broker Anderson Harris, who pointed out that: “if [a] loan is taken out fraudulently and subsequently not repaid, this will be seen as a black mark on your credit file and could affect your ability to get a mortgage.”

The image that Wonga present of themselves is different to that of independent pollsters. The company boast that they have a great customer satisfaction record, however YouGov recently surveyed some of its borrowers and found that they scored worse than Ryanair.

Interviewing at random 89 borrowers, 24 per cent were satisfied, 41 per cent dissatisfied, and 35 per cent neutral.

Wonga are, indeed, a consequence of the deleterious financial situation in the UK, rather than a cause of it. No one would deny this. But their loans don't help the personal finances of many vulnerable today. They say they turn many people away. Perhaps true, but should they warn more people of the dangers of using their product? I say yes. In addition to financial health warnings being put on their adverts, I'd like to see Wonga advertising the services of ethical lenders such as credit unions – who are better placed to serve those financially vulnerable people in hock to them.

So now Wonga have made all that money, should they keep it? Far be it from me to tell a private company what to do with its money, but maybe they could offer some to the Church of England who, along with the archbishop of Canterbury Justin Welby, are busy making the case and building up the presence of credit unions. Though really I would prefer to see the company make less money in the future – after all, nobody should be comfortable with the idea of firms profiting from poverty. It may be legal, but is it right?

A payday lender in Brixton. Photograph: Getty Images

Carl Packman is a writer, researcher and blogger. He is the author of the forthcoming book Loan Sharks to be released by Searching Finance. He has previously published in the Guardian, Tribune Magazine, The Philosopher's Magazine and the International Journal for Žižek Studies.
 

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White supremacists are embracing genetic testing - but they aren't always that keen on the results

Users of far-right site Stormfront are resorting to pseudo science and conspiracy theories when DNA tests show they aren't as "pure" as they hoped.

The field of genomics and genetics have undergone almost exponential growth in recent years. Ventures like the Human Genome Project have enabled t humanity to get a closer look at our building blocks. This has led to an explosion in genetic ancestry testingand as of 6 April 2017 23AndMe, one of the most popular commercial DNA testing websites, has genotyped roughly 2 million customers.

It is perhaps unsurprising that one of the markets for genetic testing can be found among white suprmacists desperate to prove their racial purity. But it turns out that many they may not be getting the results they want. 

Stormfront, the most prominent white nationalist website, has its own definition of those who are allowed to count themselves as white - “non-Jewish people of 100 per cent European ancestry.” But many supremacists who take genetic tests are finding out that rather than bearing "not a drop" of non-white blood, they are - like most of us a conglomerate of various kinds of DNA from all over the world including percentages from places such as sub Saharan Africa and Asia. Few are taking it well.

Dr. Aaron Panofsky and Joan Donovan, of UCLA’s Institute for Society and Genetics and the research institute Data and Society respectively, presented a research study (currently under peer review for publication) at the American Sociological Association a week ago, analysing discussion of GAT on Stormfront forums. Panofsky, Donovan and a team of researchers narrowed down the relevant threads to about 700, with 153 users who had chosen to publish their results online. While Panofsky emphasised that it is not possible to draw many quantitative inferences, the findings of their study offer a glimpse into the white nationalist movement's response to science that doesn't their self perception. 

“The bulk of the discussion was repair talk”, says Panofsky. “Though sometimes folks who posted a problematic result were told to leave Stormfront or “drink cyanide” or whatever else, 'don’t breed', most of the talk was discussion about how to interpret the results to make the bad news go away”.

Overwhelmingly, there were two main categories of reinterpretation. Many responses dismissed GAT as flimsy science – with statements such as a “person with true white nationalist consciousness can 'see race', even if their tests indicate 'impurity'".

Other commentators employed pseudo-scientific arguments. “They often resemble the critiques that professional geneticists, biological anthropologists and social scientists, make of GAT, but through a white nationalist lens", says Panofsky. 

For instance, some commentators would look at percentages of non-European DNA and put it down to the rape of white women by non-white men in the past, or a result of conquests by Vikings of savage lands (what the rest of us might call colonialism). Panofsky likens this to the responses from “many science opponents like climate deniers or anti-vaxxers, who are actually very informed about the science, even if they interpret and critique it in idiosyncratic and motivated ways".

Some white nationalists even looked at the GAT results and suggested that discussion of 100 per cent racial purity and the "one drop" rule might even be outdated – that it might be better to look for specific genetic markets that are “reliably European”, even though geneticists might call them by a different name.

Of course, in another not totally surprising development, many of the Stormfront commentators also insisted that GAT is part of a Jewish conspiracy, “to confuse whites by sprinkling false diversity into test results".

Many of the experts in the field have admitted to queasiness about the test themselves; both how they come to their results and what they imply. There are several technical issues with GAT, such as its use of contemporary populations to make inferences about those who previously lived in different places around the world, and concerns that the diversity of reference samples used to make inferences is not fully representative of the real world. 

There are other specific complications when it comes to the supramacist enthusiasm for GAT. Some already make a tortous argument that white people are the “true people of color" by dint of greater variation in hair and eye color. By breaking up DNA into percentages (e.g. 30 per cent Danish, 20 per cent German), Panofsky says GAT can provide a further opportunity to “appropriate and colonise the discourse of diversity and multiculturalism for their own purposes". There's is also, says Panofsky, the simple issue that “we can’t rely on genetic information to turn white nationalists away from their views."

“While I think it would be nice if the lesson people would take from GAT is that white nationalism is incoherent and wrong. I think white nationalists themselves often take the exact opposite conclusion."