But consumer watchdogs have lambasted companies such as Amigo Loans and BrightHouse for the ‘unethical’ practice
Image: MANCHESTER EVENING NEWS)
Lenders offer clients money to attract friends and family to their books.
High interest rate companies such as Amigo Loans and BrightHouse have been criticized for the practice.
Consumer watchdogs say the incentives are “cynical.”
Amigo customers can earn up to £ 1,000 if they ask a friend to take out a loan of £ 10,000 at an annual interest rate of 49.9%.
Hire-purchase retailer BrightHouse, with rates up to 99.9%, is offering £ 220 to introduce a friend.
Door-to-Door Lender Provident will pay customers £ 30 if a friend borrows £ 100 or more at 535%, while Loans At Home will remit £ 20 at 433%.
Recent figures from the Bank of England show households have £ 204 billion in unsecured debt.
Marc Gander of the Consumer Action Group said the programs were “meant to attract people.”
Martyn James of claims site resolver.co.uk added: “We have serious ethical concerns.
Amigo insisted that only a “tiny percentage” of loans were funded by his program.
BrightHouse said it was common practice among retailers.
Loans At Home said it was “happy to offer a small reward” for customer referrals.