Sweden announces SMS loan crackdown

The Swedish government announced plans on Friday to tackle the problem of text message loans aimed at the young, as the opposition Social Democrats demanded a total ban.

“We plan to present a bill in the spring of 2010 putting stricter conditions on access to credit, including SMS loans, by requiring proof of creditworthiness,” a spokesman for the consumer affairs ministry, Yoav Bartal, told AFP.

The new lending system has enabled people usually barred from receiving loans, such as teenagers and other low- and no-income groups, to borrow cash without delay.

By sending or responding to an SMS, they can have quick cash deposited in their bank accounts.

Meanwhile the opposition Social Democrats adopted a resolution at their party convention on Friday going even further, calling for a total ban on SMS loans to children under the age of 18, including those who are solvent.

“I get messages and mails from parents almost every day to say that their children have gotten loans without really wanting them by just saying yes when they got an offer on their phones,” party member Veronica Palm said, adding that the number of indebted youths has skyrocketed in Sweden since the introduction of SMS loans in 2006.

She cited other cases of youths who “asked for (a loan) during a Friday night party when they didn’t really know what they were doing.”

The loans, which on average amount to 3,000 kronor ($425), come with average fees of 500 kronor and interest payments of 50 kronor and must be repaid at a breakneck speed of just 30 days.

The level of debt default over text message loans has soared since their introduction, with one-third belonging to people aged under 25, according to debt recovery officials.

SMS loans exist in the United States and several other European countries.

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Youth crime busters to get national reach

Sweden announced on Thursday that pilot projects helping young people stay out of crime had reaped such success that they would be rolled out nationwide.

Youth crime busters to get national reach

Sweden’s Justice Minister Beatrice Ask spent Thursday morning speaking with children enrolled in a programme where several different state agencies cooperate to help them (social insatsgrupper).

“One of the most important things when working with these young people is making an individual action plan, which often involves friends, family, and neighbours,” Ask told The Local.

In the youth programme in Botkyrka municipality, just south of Stockholm, local police list the area’s young offenders who they think are the most likely to reoffend. The greater risk being that the teenagers get stuck with a criminal lifestyle.

Using the list, social services, the police, the schools and even Sweden’s Employment Agency (Arbetsförmedlingen) work together with the youngsters in order to help them stay crime-free.

Botkyrka has two youth groups, one with members between ten and 18-years old and the other with young adults aged 18 to 25.

The success in Botkyrka was instrumental in rolling out the programme nationwide, said Ask, who also underlined there are benefits not only to the young people but to the entire neighbourhood.

“The intention is to get the young people to put a stop to their criminality and substance abuse and to make a better and calmer situation for neighbourhood,” Ask told The Local.

“We often try to involve several people depending on the situation, and we find that a lot of people are actually willing to contribute to a better neighbourhood.”

The Swedish government announced that over the next month, its representatives will be meeting with authorities including The Swedish National Agency for Education (Skolverket) and the National Health Board (Socialstyrelsen) to further discuss the expansion.

Oliver Gee

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