Sweden to Crack Down on SMS Loans
Sweden is to crack down on SMS loans to youngsters with the government promising stricter conditions on claiming credit while the opposition Social Democrats promise a complete ban for under 18's.
The SMS loan lending system, which was introduced in 2006, has enabled people usually barred from receiving loans, such as teenagers and other low- and no-income groups, to borrow cash almost immediately by sending a text. The number of un-repaid text message loans has soared to the tens of thousands since their introduction, with one-third belonging to people under the age of 25, according to debt recovery officials.
The centre-right government's consumer affairs ministry will put forward a bill next Spring which will put stricter conditions on access to credit by producing proof of creditworthiness while the Social Democrats passed a resolution at their party congress which called for a total ban on SMS loans to children under the age of 18, regardless of credit ratings.
The loans, which on average amount to 3,000 kronor (425 dollars), come with average fees of 500 kronor and interest payments of 50 kronor and must be repaid at a breakneck speed of just 30 days.