Rise of the loan fee scammers

Advance fee fraud is now the most common type of scam reported to the Financial Conduct Authority.

If you have limited access to mainstream credit, or a lower income or credit rate, you are vulnerable to scammers.

Fraudsters will try to convince you that you can pay an advance fee for a loan, which you will never receive.

Some people are persuaded to make several payments before they realise it is a scam.

Be aware if you are asked to pay an up-front fee for a loan that you could be walking into a scam.

Some common signs include:

being told that the fee is refundable and will be used as a deposit, administrative fee, or as insurance because of bad credit history

being asked to pay various follow-up fees in order to get the loan, ranging from £25 to £450 each time

being put under pressure to pay quickly and/or asked to pay via an unusual method (eg Western Union, iTunes vouchers).

Before you apply for a loan, make sure you check the firm is authorised by the FCA.

If you take out a loan with an unauthorised firm, you won’t be covered by the Financial Ombudsman Service if things go wrong.

If you think you have been approached by an unauthorised firm or a scammer, report it to the FCA via its reporting form or Consumer Helpline on 0800 111 6768.