Desperate Britons are tricked into losing money in a quick loan scam that has exploded thanks to the cost of living crisis.
With cases up 90% so far this year compared to the first five months of 2021, Lloyds Bank has issued an urgent warning to keep customers vigilant.
Fraudsters who run these “advance fee” scams set up online advertisements for fake companies or pose as real companies offering quick loans to trick unsuspecting victims.
It is likely, given the rise in bills, that people in difficulty will be tempted by these advertisements offering short-term solutions.
Scammers approve loan applications and then claim that the victim has to send them money before they can get the loan.
Applicants who click on the advertisements will have their loans “approved” regardless of their credit history, but will then be told that they must pay an upfront fee by bank transfer before receiving the money.
Once these fees are paid, the victim may be asked for more money from the fake lending company until they become suspicious.
In the end, the victim never receives the loan and never hears from the company again.
Some of the common reasons scammers give for needing payment up front include: verification fees, processing fees or guarantor fees and as always with scams, criminals know how to be persuasive and appear authentic.
They have also been known to claim that the payment is made directly to the loan company or that it is a tax payment.
The Financial Conduct Authority warns that in some cases victims have been contacted out of the blue by scammers via text, email or phone, offering a loan.
The average victim loses around £231 from the scam, according to Lloyds.
Do you think you are being scammed? Here’s what to do
• Stop: Take a moment to stop and think before parting with your money or information that could protect you.
• Challenge: Could it be wrong? You can reject, refuse or ignore any request. Only criminals will try to rush you or panic you.
If the caller claims to belong to a known organization and you have doubts, find a contact number on their official website and contact them to verify the call.
• Protect: Contact your bank immediately if you think you have been scammed and report it to Action Fraud
Liz Ziegler, director of retail fraud and financial crime at Lloyds Bank, said: “Organized crime gangs will ruthlessly exploit any change in consumer behavior.
“We have seen this during the pandemic with the upsurge in shopping scams, some products becoming scarce and more people buying online.
“Now, as the cost of living rises, 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 poor credit or may already be struggling financially.
“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 plenty of organizations that can help, and it always makes sense to talk to your bank first.”
When applying for a loan, the FCA advises customers to check that the company’s details match the details on their financial services register.
If they don’t or if you still have concerns about the company, contact the FCA through their helpline – 0800 111 6768. Or contact Action Fraud.
Between April 2020 and March 2021, Action Fraud received 91,593 reports of application fraud, including advance fee schemes.
A total of £2.35bn was lost to fraud in 2021, according to Action Fraud.