By Jim Edwards From Business Insider

British police will reconsider opening an inquiry into why payday lender Wonga — which charges annual interest rates of 5,853% — sent fake lawyers’ letters to customers who were in arrears on their debts, the BBC reported. The police have been asked by a lawyers’ group to look into whether the fake letters constitute blackmail.

The move comes just days after Wonga’s CEO and founder/chairman both left the company. Previously, police had decided not to pursue a criminal investigation.

Wonga is huge in Britain. It’s famous as the shirt-front sponsor of Newcastle United, the Premier League soccer team. Wonga did not return a message requesting comment.

Allegations over the fake letters first emerged last year. At the time, police referred the company to the U.K.’s Office of Fair Trading and the Financial Conduct Authority. This week, the FCA said Wonga had settled the case for £2.6 million ($4.4 million), payable to 45,000 customers — about £50 (about $85) each, the BBC said:

An investigation by the regulator found that Wonga sent letters to customers from fake law firms called “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries”, sometimes charging customers a fee for these letters.

Wonga’s chairman, Errol Damelin, quit on June 13. A few days later, Wonga CEO Niall Wass also quit to join Uber as one of its international chiefs. Wass had only held the job six months.

There are no allegations of wrongdoing against either man.

The Law Society, a lobby group for U.K. lawyers, asked the police to see whether Wonga had committed “blackmail,” and whether it had broken any laws that prohibit unqualified people from pretending to be lawyers, according to The Financial Times:

It has asked the force to investigate three specific offences: whether Wonga obtained “pecuniary advantage by deception and blackmail” and whether it committed offences under the Solicitors Act and the Legal Services Act.

On Wednesday it emerged that Wonga, which offers short-term loans at an annual interest rate of 5,853%, had sent out letters to struggling borrowers in the names of two non-existent law firms. The communications were typically headed up “Urgent message” and began: “We have been instructed by Wonga to recover from you a debt of £X …”

Wonga told The Guardian it had not yet been contacted by the police. Earlier, the company published an apology for the fake letters, in which it admitted the deception:

Between 2008 and 2010, we sent out letters to 44,556 customers claiming to be from companies “Barker & Lowe” and “Chainey, D’Amato & Shannon”. These letters were in fact from Wonga. They gave the misleading impression that customers’ outstanding debts had been passed on to a law firm (or other third party) with the threat of adverse consequences if the debts were not repaid quickly. Charges were added to some customer accounts as a result of this practice.

This practice was unacceptable and should never have happened. It ran contrary to the principle of transparency on which our business has been built.

Read the rest of Wonga’s apology here at: https://www.wonga.com/apology.aspx

IMAGE: Wonga founder and chairman Errol Damelin Errol Damelin The Guardian / YouTube

For more on this story go to: http://www.businessinsider.com/police-re-consider-probe-into-wonga-blackmail-accusations-2014-6#ixzz364rBKlIp