Festive shoppers at rising risk of loan fee scams

One tactic used by fraudsters is to pressurise consumers usually by seeking fast payment for a non-existent loan. Its tactics also include, having made several loan applications, a victim is then contacted out of the blue by text, email or phone and offered a loan.  

Additionally, they could be asked to make an upfront payment into a bank account or transferred the money via an unusual method or scammers may claim that the fee is refundable and will be used as a deposit, administrative fee, insurance or because of bad credit history.   

Alongside this, this type of fraud could see the scammer – once the first payment has been made – contact a victim again to ask for more payment before they give them the loan, or the victim simply doesn’t receive the loan despite making the payments.  

The FCA has also found that 64% of consumers are unaware of loan fee fraud and 22% are able to identify all its warning signs. Because of this, it has launched its latest campaign to “arm consumers with the knowledge and tools they need” to avoid loan fee fraud this Christmas.  

The regulator’s executive director of enforcement and market oversight Mark Steward said: “This Christmas period is going to be tough for many consumers, and those who have been hardest hit by the rising cost of living will understandably be anxious about meeting the additional expenses that Christmas brings.  

“Some consumers may be tempted to take out loans to meet these extra costs. Unfortunately, this is where loan fee fraud scammers and illegal lenders see an opportunity. 

“At a time of heightened stress and pressure, scammers and illegal lenders will rush consumers into bad-decision making. Be aware of red flags – such as being asked for a fee or being asked to pay in an unusual way.”