Alice, a UK citizen living in the UK, has a debt problem.
- Alice owes £10,000 to Bob, paying £500 per month and accruing interest at an annual rate of 20%.
- Alice owes £5,000 to Carol, paying £250 per month and accruing interest at 20% annually.
- Alice owes £5,000 to Dave, paying £250 per month and accruing 20% annual interest.
Alice hears about debt consolidation loans, decides it's a good idea, and applies with a few companies who offer such loans. Most companies refuse because she has bad credit.
Eve, ever the evil one, sees an opportunity to potentially rip off a financially illiterate person, and offers terms so blatantly terrible that no reasonable person who truly understands the terms and their consequences would ever accept:
- To start with, Eve charges a £5,000 refinancing fee, increasing the total loan balance to £25,000.
- Eve's loan will accrue interest at an annual rate of 100%, compounded monthly, for 8.33% interest per month.
- Eve will require a minimum payment each month of £2,500.
Alice, unfamiliar with the importance of certain kinds of terms in financial contracts, accepts Eve's offer. Eve pays off Alice's debts to Bob, Carol, and Dave, and Alice begins paying £2,500 per month to Eve. Despite paying £1,500 more per month than before, she is reducing her remaining balance by £250 less per month than before.
Alice struggles to pay so much per month, but reassures herself that paying off the debt faster will be worth it in the long run. After several months of this, she checks her remaining balance and is shocked and horrified by how little the amount still owed has decreased. Alice finally reads and understands the terms of Eve's loan in full, and realizes how terrible a mistake accepting the loan was.
Alice tries to find another company to take over the loan with better terms, but every company she talks with refuses. She tries to negotiate with Eve for better terms, but Eve is very happy with the loan's terms as is. Eve even threatens legal action if Alice misses a payment.
Alice cannot afford a lawyer, as all of her money is going to living expenses and repaying Eve.
What options, if any, does Alice have for redress against Eve's exploitation of her?
