Loan fee scam alert

In 2017 there was a 44% jump in reports of loan fee fraud made to the Financial Conduct Authority, where fraudsters contact those who have been looking online for a loan. The loan is offered- but only if the borrower makes one or more upfront payments. Scammers claim that the fee is a deposit or admin fee. Those targeted are often on low incomes and struggle to access mainstream credit. The loan is never received.

Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said:

“Scammers take advantage of the excitement people feel when they are offered or accepted for a loan and make the loan conditional of an upfront fee, which can increase to hundreds of pounds. Of course, no loan ever materialises.”

FCA research shows that 72% of the public are unaware of scams in relation to loans and 34% said they didn’t know how to check if a provider was legitimate.

Whilst being asked to pay before receiving credit can be a worry, there are legitimate loan brokers who charge upfront fees. Borrowers can easily check if the provider is genuine by checking that they are on the FCA register. This means that they provide credit services to the standard required to gain authorisation from the Financial Conduct Authority.

The FCA has stated some other warning signs for a fraudster including:

·         Being asked to pay in an unusual way e.g. by iTunes vouchers or a money transfer service.

·         Being put under pressure to pay the fee quickly.

·         Being asked to pay multiple fees.

If you feel you have been the victim of loan fraud, you can report this to Action Fraud here.