It’s thought that over £3.5 million was lost to a scam known as loan fee fraud last year, as fraudsters are increasingly targeting people on the look-out for loans and credit cards.1
What is loan fee fraud?
Loan fee fraud happens when a fraudster poses as a legitimate lender and then asks people to pay an upfront fee when they’re searching for a loan or credit card. Once the fee is paid, the credit is never received. And, according to the Financial Conduct Authority (FCA), reports of this type of fraud have increased by 44% over the last year.2
It’s also thought they’re using this tactic to target people who typically have a lower credit score and who may find getting credit difficult.
Would you know how to spot if a credit provider was genuine?
New research from the FCA shows that 34% of people admitted they weren’t confident that they’d know how to check if a loan provider was the real-deal.3 And being asked for an upfront fee isn’t always a tell-tale sign that something isn’t right, because there are some providers who will ask for this legitimately.
Bear in mind that the scammers will also have a range of genuine sounding reasons for asking for a fee – including claiming it’s a deposit, admin fee or insurance for those with low credit ratings, but you should still be wary.
Other warning signs to watch out for include:
- 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
So if you’re not 100% sure and something doesn’t seem right, we’d recommend you do some more research before handing over any cash. One way to find out more, is by checking the FCA register, as this will show whether the firm is authorised and registered.
What should you do if you’re on the lookout for a loan?
If you’re considering taking out a loan, a good and secure way to see what’s out there and to find out what you may be eligible for is by using an eligibility checker, like our free Loan Matcher tool.
We hope you found this article useful and remember, if something doesn’t seem quite right always do your research. You can find more articles and handy tips about protecting yourself from Fraud in the Security area of our blog.
1 Figures from Action Fraud (referenced here https://www.fca.org.uk/news/press-releases/fca-warns-public-increased-threat-loan-scams)
2 Statistics taken from https://www.fca.org.uk/news/press-releases/fca-warns-public-increased-threat-loan-scams
3 Statistic taken from https://www.fca.org.uk/news/press-releases/fca-warns-public-increased-threat-loan-scams