Fast loan scam targeting those struggling in the cost of living crisis surges and Lloyds puts out an ‘urgent warning’: Here’s how it works…
- Fraudsters pretend to approve loans and demand cash before paying out
- Victims lose an average of £231 to the ruse
- Reports of this type of scam have risen 90% this year
Desperate Britons are being tricked into losing money in a fast loan scam which has ballooned thanks to the cost of living crisis.
With cases up 90 per cent so far this year compared to first five months of 2021, Lloyds Bank has issued an urgent warning for customers to stay vigilant.
Fraudsters running these ‘advance fee’ scams set up online adverts for fake companies or impersonate genuine firms offering fast loans to trap unsuspecting victims.
It is likely, given rising bills, that those struggling may be tempted by these ads with the offer of short-term solutions.
Scammers approve loan applications and then claim the victim needs to send them cash before they can get the loan.
Applicants who click on adverts will have loans ‘approved’ regardless of their credit history, but are then told they must pay an upfront fee by bank transfer before receiving the money.
Once this fee is paid the victim may be asked for more money from the fake loan company until they become suspicious.
Ultimately the victim never receives the loan and never hears from the company again.
Some of the common reasons scammers give for needing payment in advance include: verification fee, processing fee or a guarantor fee and as always when it comes to scams, criminals know how to be persuasive and appear genuine.
They have also been known to claim the payment is for a fee directly to the loan company or a tax payment.
The Financial Conduct Authority warns that in some instances victims have been contacted out of the blue by scammers via text, email or phone, offering a loan.
The average victim loses around £231 to the scam, according to Lloyds.
Do you think you’re being scammed? Here’s what to do
• Stop: Take a moment to stop and think before parting with your money or information could keep you safe.
• Challenge: Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.
If the caller claims to be from a known organisation and you are suspicious find a contact number on their official website and contact them to verify the call
• Protect: Contact your bank immediately if you think you’ve fallen for a scam and report it to Action 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.’
When applying for a loan the FCA advises customers to check that the firm’s contact details match the details on their Financial Services Register.
If they don’t or if you still have concerns about the company get in touch with the FCA via 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.
In total £2.35billion was lost to fraud crime in 2021, according to Action Fraud.