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5 minute read
Loan fee fraud is hurting people most in need
Written by Steve Heywood, media manager
With the cost-of-living crisis biting and Christmas around the corner, the strain on our limited resources is growing. And scammers are lurking in the background, waiting to pounce. No more so than those peddling ‘loan fee fraud’.
What is load fee fraud?
‘Loan fee fraud’ is when customers are searching for a loan and are pressured into paying an upfront fee but then never receive the loan. Victims are often asked to make the payment quickly or are asked to make it through an unusual method, like a voucher.
This scam targets those most financially vulnerable, such as those that don’t have access to mainstream credit and have to borrow from more unregulated loan services.
If you are unsure whether to take a loan, you can check whether the loan provider is on the Financial Services Register.
Who does it affect?
This scam affects those that are:
- Aged 25 to 45
- Working in a manual profession
- Under financial pressure
- Have limited borrowing options
Why is it important?
Throughout the covid-19 pandemic, ‘loan fee fraud’ increased and is expected to do so as the cost-of-living crisis continues to pressure people. To cope with this pressure, reports have found people are doing more unregulated borrowing. Using unregulated loan services places people more at risk of being a victim of ‘loan fee fraud’.
How can you protect yourself?
Know the warning signs:
- If you are asked to pay an upfront cost, it could be a scam
- If you are pressured to pay quickly, it could be a scam
- If you are asked to pay in an unusual way, such as vouchers or money transfers, it could be a scam