As long as there are bad or inadequate laws in place firms like Wonga will be legitimate (for which read: lawful.) “Legitimate” is not the same as “morally defensible”.

““DWP intends to enable claimants to access financial products that offer budgeting support by subsidising the cost of these products for an interim period of one year per claimant as they transition onto Universal Credit. At the end of the initial subsidised period DWP will withdraw the subsidy. The claimant will then choose whether they wish to continue using the account, with either themselves or a third party meeting the ongoing monthly cost:”
One way to trap claimants into using the service is to trap them in debt. For the first time, credit histories of potential borrowers will be irrelevant. Companies involved in this scheme will have access to claimant’s money at the source, meaning there is no choice but to pay back any loans that may be offered”

And as a whopping £145 million worth of contracts will be awarded – if this goes through – they might like to get to know who they may be dealing with, come 2015…..

http://ted.europa.eu/udl?uri=TED:NOTICE:296147-2012:TEXT:EN:HTML&src=0

Do they charge too much compared to an unapproved bank overdraft? Thats whst you need to compare it to. And offering you more for being a good customer? Credit card companies do exactly the same thing. Banks, credit card companies, any one who loans money are evil then.