Lloyds Bank has issued a stark warning to all customers as many people are losing out on £711 each, on average.
The banking giant said the number of "advance fee scams" jumped up by more than 80% last year.
Advance fee scams happen when a victim is asked to pay an upfront fee for goods or services that don’t materialise. This could be for a loan, to secure a rental property, or even a new job.
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Worryingly, new analysis also shows that those living in more deprived areas of the country are twice as likely to fall victim as those in less deprived areas, accounting for over 70% of all advance fee scam cases.
Those aged between 25 and 34 are most likely to fall victim, followed by 35 to 44 year olds. Collectively those two age groups make up around half (49%) of all victims.
Lloyds said loan fee scams are currently a "particular concern", with many people struggling amid the cost of living crisis. This is because fraudsters often target people on low incomes or with a poor credit history.
Victims will typically reply to an online advert for a "fast loan" from a company they have never heard of, though sometimes the fraudster will try to impersonate a genuine firm. They will have their application approved regardless of their credit history.
Before they receive the loan, they are told they must pay an upfront fee by bank transfer. Once this fee is paid, the fraudster may even ask for further payments. Eventually, the victim does not hear from the company again and the loan is never received.
Some common reasons given by the scammers for these payments in advance include:
- Payment release fee
- Insurance fee
- Verification fee
- Loan company fee
- Processing fee
- Guarantor fee
- Tax payment
Liz Ziegler, Fraud Prevention Director, Lloyds Bank, said: “Fraudsters will ruthlessly adapt to any changes in consumer behaviour and, with the increased cost of living putting more pressure on people’s finances, the recent surge in advance fee scams targeting those on low incomes or with a poor credit history is alarming.
“The important thing to remember is that a genuine lender will always conduct thorough credit checks prior to agreeing a loan and won’t ask for an upfront payment before releasing the funds. If you’re concerned in any way about your finances there are lots of reputable organisations that can help, and it always makes sense to speak to your bank first.
“The abundance of these fake online ads reinforces the importance of the government’s Online Safety Bill to ensure social media sites and search engines stamp out fraudsters operating on their platforms.”
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