There are millions of scams currently circulating around the UK as we speak with thousands falling victim to them each and every single week.
Just this week, Which? have asked people to stay vigilant after scammers were selling false car insurance which their investigators found out was leading to many people being on the roads under faulty cover.
The scamming doesn't stop there however with yet another scam now doing the rounds.
READ MORE: Drivers issued with urgent warning amid car insurance scam 'too good to be true'
According to financial experts at Little Loans, there has been a staggering 900 per cent increase in victims of a loan scams resulting in people people conned out of their hard earned cash.
The experts have said that the scam has been circulating over the course of the last year and is targeting consumers looking to apply for loans, specifically those seeking high-cost, short-term credit. This means that those falling victim are often financially vulnerable.
The scam, known as cloning, sees scammers pretend to be representatives from loan lenders and credit brokers in a bid to con unsuspecting customers out of their money. In many instances this ends up being hundreds or even thousands of pounds.
Little Loans, who are a Financial Conduct Authority (FCA) regulated and authorised loan broker, has recently seen over a 900% increase in queries from those being scammed within the past year.
Alex Kosuth-Phillips, the customer services manager at Little Loans explained the rise in victims of the scam. He said: "This particular scam is not new however we have seen a marked increase in the number of reports we are receiving recently from customers who have been on the receiving end of the scam – over 200 in the last month alone. This is a 965% increase from March this year.
“Just three months ago, we were seeing around 20 queries per month from customers being fooled by the scam. Clearly, the scam is circulating even more and conning an increasing number of Brits. This figure, of course, only includes the victims who have got in touch with us. The chances are there are many, many more victims out there.”
“The increase in scam reports seems to coincide with the emergence of the cost of living crisis, so we suspect that the scammers have sensed an opportunity to scale up their efforts at a time when a far greater number of people may be feeling the pinch and needing quick access to credit.”
So what do you need to know about the scam?
How does the scam work?
Alex said the scam was knowing as "cloning" - and it can sadly be very convincing.
He explained: "This type of scam is known as ‘cloning’. The scammers will pick out a legitimate, Financial Conduct Authority (FCA) authorised and regulated loan provider or credit broker and pretend to be a representative from that company.
“They then get in touch with a large pool of people either via cold calling, emailing or SMS messages and indicate to these people that they have been approved for a loan. The APR the person is offered is typically a lot less than advertised by the legitimate company to make the offer “too good to turn down”. The list of contacts may have been purchased from data sellers or the scammers may use other tactics such as trial and error phone number calling or email address generation.
“They will often use the name of a legitimate loan company and possibly even direct customers to the legitimate website to try and convince the target that they are indeed a representative of the cloned firm.
“The scammers will then state that, in order for them to transfer the loan funds into their bank account, the victim must pay either the first instalment of the loan upfront (which could run into the hundreds of pounds) or pay a release fee.
“A newer tactic is where the representative asks if the customer has a guarantor; if they do not, they will ask for a “guarantee” fee which ranges from £25 to £150.
“Of course, the loan funds never materialise and the victim ends up out of pocket. We have even received reports of scammers requesting that the victim send Amazon vouchers to a specified Amazon account or send money via PayPoint or Western Union money transfer."
What should I do if I have been scammed?
Alex suggests that if you are unsure about any communications received from a lender or credit broker, the best thing to do is to get in touch via their official website.
He continued: "Sometimes victims will contact us to verify that the offer is legitimate, which is great as we can then immediately let them know it is a scam and that they should not continue their contact with the supposed representative.”
Sadly by this point the funds will have likely already left your bank account. If this happens, your best bet is to then report what happened to the FCA and Action Fraud. The experts recommend visiting Citizens Advice to see what your options are.
The FCA has a helpline where consumers can speak to someone about a potential clone or to find out what they can do if they have been the victim of a cloning scam. You can find more details here.
What should I look out for?
Alex concluded: “The key thing to remember is that any legitimate loan company would never ask the customer to pay any money upfront to release the loan funds. You should never pay upfront fees for a loan or send money in return for a loan."
If in doubt about the legitimacy of any loan provider or broker, you can check their credentials on the financial services register here.
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