Can The Money Shop do this?

[WhySoHard]

My niece got into financial difficulties her last year at university and went to The Money Shop for one of those payday loans. She cashed five cheques using her chequebook and cheque guarantee card. The Money Shop takes a commission of around £16 per cheque and she used the money to pay her rent. Apparently The Money Shop gives the option of "extending" your payday loan and my niece did this several times. Each time you "extend" taht £500 loan you have to pay around £75 in fees. Unknown to us, her financial situation got even worse and she could no longer afford to either pay back the payday loan or even pay the £75 fees to extend it. Then she asked for help. She asked her mum to loan her the £75 in fees so that she could extend the loan for one more month. Meanwhile she got herself an extra part-time job to get more money together. So my sister (her mum) paid the £75 on her own debit card, over the phone.

Fast forward, the payday cheques are finally cashed by The Money Shop but my niece's bank only honours two of the cheques. The other three cheques are returned saying "do not meet cheque card criteria" or something like that. I thought all guaranteed cheques had to be honoured?

Next thing we know, my sister has three mysterious transactions on her debit card. Her bank informs her that The Money Shop's head office in Nottingham has charged £300 to her debit card.

Now, my niece obviously had a contract with The Money Shop and they have her cheque guarantee card on file and probably do have the right to charge it should she default on her agreement with them.

But legally,do they have the right to charge my sister's card? She hasn't signed anything giving them authorisation.

[alanq]

There is almost certainly something in your niece's bank's Ts&Cs saying that multiple cheques for a single transaction will not be guaranteed.

Unless she agreed to act as guarantor, they have no rights to claim money from your sister. Even then I would have thought there would have to be some notification.

[jonesMUFCforever]

They do not have the right to debit her mother's card without authority.
Ask her bank to chargeback these items.
This means the niece will still be responsible for the debt plus any charges levied by the money shop.

[WhySoHard]

Originally Posted by jonesMUFCforever

They do not have the right to debit her mother's card without authority.
Ask her bank to chargeback these items.
This means the niece will still be responsible for the debt plus any charges levied by the money shop.

I am actually surprised that The Money Shop did this. It's breaking the law.