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Watchdog: UK's biggest payday lender used fake law firms to chase debts

LONDON - Regulators have ordered Britain's biggest payday lender to pay 2.6 million pounds ($4.4 million) in compensation to tens of thousands of people for unfair debt collection practices.

Britain's Financial Conduct Authority said the company, Wonga, sent letters from non-existent law firms to customers in arrears, threatening legal action if they did not pay their debts. In some cases, the company even charged customers for administration fees for sending the letters.

The FCA said Wednesday that Wonga must compensate around 45,000 customers.

Wonga apologized for the wrongdoing, which took place between 2008 and 2010. It said "the practice was unacceptable and we voluntarily ceased it nearly four years ago."

The FCA said Wonga made nearly 4 million loans to more than 1 million customers in 2012.

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