Lenders Can Tempt Problem Gamblers with Credit Card Use Even Though Operators Can't

Published May 30, 2020 by Lee R

Lenders Can Tempt Problem Gamblers with Credit Card Use Even Though Operators Can't

The FCA has suddenly become a player in the fight against credit card debt from gambling in the UK.

While it is well-known that the struggle against addiction and gambling-related harm has intensified during the period of COVID-19 lockdowns, so have the solutions.

The Current Crisis

At this juncture, there are one out of five problem gamblers among the UK's 800,000 credit card-using gamblers, with the UK Gambling Commission’s chief executive Neil McArthur going to great pains to insure the public is aware of the “significant financial harm” credit card gambling can lead to.

Looking at Lenders

Many are calling for stricter controls over gaming operators and the permissions they extend to players; while others are looking more thoroughly into a deeper source of vulnerability in the first place: the credit card companies themselves.

How Lenders Prey

While most would not correlate credit card companies with making gamblers vulnerable, concerns linger about the interest rates credit companies charge as incentivisation from within to get their users to gamble and fall into debt, in turn paying the credit card companies exorbitant interest rates on top of problematic gambling loss receipts.

Card Lenders

With predatory credit cards charging over 100 percent in interest, credit card debt from gambling can actually double, exacerbating the destructive or problematic behavior of any gambler.

Paycheck Lenders

This is provided as worst case scenario to in comparison to equally notorious payday lenders, who are today by regulators forbidden of charging over 100 percent on money borrowed from them--money that is often sucked away from a paycheck in the form of paying a gambling debt or or using the funds for gambling.

FCA Controls

To this end, the UK's Financial Conduct Authority has indeed started targeting lenders to prevent problem gambling and other impulsive behavior that plunges afflicted individuals into debt.

Rules include requiring lenders to intervene if 18 months into a debt arrangement, the individual is paying less from their balances than they’re accruing in charges, launching a series of steps into debt consolidation for the afflicted parties, who are all too often in these debts due to gambling addictions.

FCA Expansion of Scope

While the FCA is not directly in charge of managing regulation, it can certainly extend the capping of debt to the gaming arenas; while also putting lenders to task for monitoring for afflicted behavior resulting most commonly from problem gambling.

Outlook

Further, it appears the UKGC and FCA would do well to co-ordinate regulatory efforts more closely, and unify in the fight against the losses suffered by the most vulnerable of the wide swath of credit-card using gaming populations from potentially predatory influence of credit card companies.

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