Cell Phone Loans Might Be Too Easy
In Finland, people often joke that they don't like to talk to one another; they'd rather send text messages on their mobiles phones. But now Finns have a new use for their phones: taking out loans.
By sending a text message to a loan company, consumers can get almost-instant cash.
"My friend took it once, but then he thought it was a bad idea," says Lauri Koistinen.
He says he regretted his decision because of how much he had to pay back. The loans are approved quickly but come with exorbitant interest rates.
Finland's Consumer Ombudsman's office is trying to regulate the budding industry.
"The first problem is that they can't identify the consumer sure enough," says Guntieg Planting-Visa, a lawyer with the agency.
The agency has found that customers can get money transferred to their own bank accounts using another person's cell phone and national identification number. Planting-Visa says another big problem is that people simply don't realize what they're getting into.
A radio ad for the loans promises cash in five minutes but fails to mention anything about specific terms. Instead, the ad directs customers to its Web site, where the details are given. But Planting-Visa says that's not enough information for someone borrowing money.
"He should have time to read the pre-information and contract terms and after that decide if the loan is needed," she says.
Nearly 20 companies have begun offering these loans since the business started in Finland two years ago.
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