[8][9][10] The company was responsible for inventing fully automated risk processing technology to provide short-term, unsecured personal loans online, including via tablet and mobile app.

Despite an emergency cash injection from shareholders to prevent it becoming insolvent, the firm fell into administration on 30 August 2018, with Grant Thornton appointed to wind down the business, sell assets and identify creditors.

Wonga was co-founded by Errol Damelin and Jonty Hurwitz in October 2006,[15][16] who derived the name from the Romany slang term for money that was in use in some parts of Britain since the 1980s.

[17] The plan for the company was to disrupt the short-term credit industry with a new branch of lender that provided transparency, exact control of amount and payment date, and immediate access to funds to customers, without hassling them through faxing or emailing documents.

[18] Although both men had previous experience in internet start-up operations, neither Damelin or Hurwitz had any within retail banking,[19] which presented a problem when seeking out funding, as many potential investors they approached perceived the short-term, small-loans business as an unprofitable, risky backwater.

The business model of lending only to those who could pay back reliably, as opposed to the much wider catchment practice of payday loans, required an algorithm that could fully determine risk in an automated manner – something they had difficulty developing in the early stages.

[18] The subsequent months of operation showed increased demand, but traditional methods of credit risk assessment proved inadequate,[citation needed] leading the company to experience default rates of around 50%.

[26] In May 2012, the firm expanded into South Africa, offering consumer loans,[27][28] and began testing their technology in November that year for a possible expansion into Canada.

Along with conforming to the new rules set out by the FCA, which limited roll-overs of loans and forced them to increase affordability checks, price caps were introduce from the start of 2015.

[32] On 4 August 2018, the company received an emergency £10m cash injection from shareholders after its chief executive warned it was in danger of becoming insolvent due to a surge in customer compensation claims.

[50] It accepted that its APR was "not cheap" but claimed that its typical customer was someone on a mid-level salary temporarily short of cash because of an unexpected bill, for example to buy a new central heating boiler or tickets to a music festival.

Ray Boulger of John Charcol, for instance, told BBC Newsnight that "Our experience is that mortgage lenders will often turn down requests for people who have had a payday loan...",[53] and Robert Sinclair, Chief Executive of the Association of Mortgage Intermediaries, said "From a consumer perspective, anybody who takes out a payday loan is clearly showing some financial distress and existing lenders will think these consumers may be maxed out.

[58] Wonga sponsored free travel on the London Underground on New Year's Eve in 2010, and posters were put up on the network advertising the website with the slogan "sometimes you need some extra cash".

[59] Media Week noted that the deal was "highly criticised" and that Transport for London later banned payday loan companies from sponsoring their services.

[68] The Guardian reported, in November 2012, that a computer in the Wonga offices appeared to have been used to remove from the company's Wikipedia page a reference to controversy over its sponsorship of Newcastle United Football Club and to delete the category of "usury" under the See Also section.

Richard Murphy from Tax Research UK commented that "the transfer of key business processes – especially those that are technology based and that can be protected by patents and copyrights – is a classic way in which companies try to move their profits between countries.

"[78] In May 2012, the company was required by the Office of Fair Trading (OFT) to improve its debt collection practices, after it was found that it had sent letters to customers in 2010 accusing them of committing fraud and saying that the police might be informed.

Wonga appealed the decision and said it believed it had grounds for suspecting dishonest conduct by the specific customers to whom letters had been sent, and that they had been sent on isolated occasions more than 18 months previously and had not been sent since.

It stated that it had put in place procedures to make sure similar problems did not occur in future, and that since then it referred cases of suspected fraud to an in-house team to investigate.

[82] The FCA found that between October 2008 and November 2010, Wonga had sent their customers letters purporting to be from non-existent law firms "Chainey, D'Amato & Shannon" and "Barker and Lowe Legal Recoveries", described as "fake" in reports, to collect money from them.

In some cases, customers were charged for the supposed lawyers' fees for these letters; Labour MP Stella Creasy asked why the police were not investigating.

[87] Consequent to discussions with the FCA, on 2 October 2014 Wonga agreed to write off the debts – thought to total £220m – of 330,000 customers who were in arrears of thirty days or more.

[94] An all-party Early Day Motion tabled in November 2011 highlighted Wonga's "high APR" and sought to restrict the level of interest that can be charged on all loans by financial institutions.

[102] In November 2013, Labour Party leader Ed Miliband criticised payday lenders for creating a "Wonga economy" and "a quiet crisis of thousands of families trapped in unpayable debt.

[50] The Business, Innovation and Skills Committee heard evidence from consumer money expert Martin Lewis that the total cost of a payday loan was more useful than APR.

"[109] In October 2014, the UK's Advertising Standards Authority (ASA) banned Wonga from using a TV advert that it said breached its code because of a claim that customers would save money.

[110][111] The ruling was in response to a complaint from the charity Citizens Advice, whose chief executive Gillian Guy, said: "Adverts must be clear about what taking out a loan means and how much it will cost.