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Consumer Protection Center issues warning on easy money

Date Posted: 2002-05-17

Okinawa Prefecture Consumer Protection Center is warning small businesses to be wary of a new loan sharking scheme that promises easy money but fails to tell takers that the interest is extremely high.

According to officials at the center, the lenders call businesses promising instant cash. They then ask for a bank account where they can deposit the money, usually on the same day. What the caller doesn?t tell the recipient is that the loan accrues an interest of 50 percent every ten days. The Japanese law sets a cap on what lenders can charge in interest for loans to individuals but there?s no such cap on loans to businesses. By giving their bank account number to the lender, the borrower under Japanese law consents to the terms of the loan, and is liable to pay the interest, no matter how high.

The Consumer Protection Center say that the activity of these loan sharks seems to be on increase as they received about 50 calls during last year, but have received three times as many this year so far. ?The best protection is not to accept any loan offers over the phone,? and official at the center advises.

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