Lloyds issues urgent warning against advance fee loan fraud 

New research from the lender has found that advance fee loan scams have surged by more than 90% in 2022. Victims each lose an average of £231.  

The scam involves victims being asked to pay an upfront fee for a loan. It normally takes place for online loans, and involves advertisements for fast loans from companies that largely do not exist – although occasionally the scam attempts to impersonate genuine firms.  

The victim’s loan application will be approved no matter what their circumstances. However, they are told they must pay an upfront fee via bank transfer prior to the loan’s disbursal.  

Once paid, it is possible the victim will be asked to make further payments. Eventually the victim will cease hearing from the company and will not receive a loan.  

Although legitimate lenders do charge loan fees, these are rarely charged upfront.  

Lloyds’ urgent warning comes as consumers are likely to be unaware of this bank fraud.  

Liz Ziegler, retail fraud and financial crime director at Lloyds Bank, said: “Organised crime gangs will ruthlessly exploit any change in consumer behaviour. We saw that during the pandemic with the surge in purchase scams as certain goods became scarce and more people shopped online. 

“Now, as living costs rise, fraudsters are increasingly turning to advance fee scams. They know that some people will need more support with their money, and victims in these cases often have a poor credit score or may already be in financial difficulty. 

“The important thing to remember is that a genuine loan company will never ask for an upfront payment before releasing the funds. If you’re concerned in any way about your finances there are lots of organisations that can help, and it always makes sense to speak to your bank first.”