Sharking

What is Sharking?

Sharking is a practice sometimes used by lenders and card companies to try to get consumers to purchase additional loan products that consumers often don't want or need, such as Accident Sickness and Unemployment Insurance.

While this kind of tactic was prevalent in the late '90s - early 2000s, regulations have since come into place to reduce the number of cases by preventing lenders from inferring that the success of a loan application depends on whether or not insurance is taken out to cover the loan.

The biggest example of Sharking in recent history was the PPI mis-selling scandal.


Q: How does it work?

A: Typically a loan application will be approved, but instead of being told this, borrowers are told their application has been 'referred' and that they need to call a number. The borrower would then be told that their application is more likely to be accepted with the addition of insurance, at added cost to the borrower.

Q: Is it the same as loan sharking?

A: Not quite. While a loan shark may give someone a loan they need at a high rate of interest, this type of sharking comes about from selling people a type of insurance they haven’t asked for and probably wouldn’t have bought anyway.

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