Scammers are looking to prey on financially vulnerable households seeking loans as living costs surge, a regulator is warning. The Financial Conduct Authority (FCA) said it was receiving a growing number of calls about loan fee fraud, when people pay fees up front for loans that they never receive.
Instead of getting the loan they were hoping for, those struggling with their finances end up even worse off - losing £280 to the scam on average. Victims tend to be aged 25 to 45, are slightly more likely to be male (60%) than female (40%) and often work in manual occupations or are unemployed, according to the regulator.
A joint statement from Mark Steward, executive director of enforcement and market oversight, and Sheldon Mills, executive director of consumers and competition at the FCA, said: "The rising cost of living is making 2022 a hard year financially. And there are scammers out there looking to make it even harder.
"Scammers are cruel. They target society's most financially vulnerable - those who tend to be on lower incomes, might have lower credit ratings or have limited access to mainstream credit."
The FCA has relaunched campaign activity to raise awareness of loan fee fraud. Warning signs of the scam include:
- Being asked to pay a fee up front;
- Being asked to pay quickly;
- Being asked to pay in an unusual way, such as by vouchers or a money transfer.
People are being urged by the regulator to use the FCA Register to check who they are dealing with. They can also visit the FCA's loan-fee fraud webpage to find out how to check and for more information.
Inquiries to the FCA's contact centre about all types of scam were up by 24% as a whole in June, compared with June 2021. In particular, reported loan-fee fraud scams into the FCA's contact centre were up by 36% in June 2022 compared with June 2021. The FCA's updated awareness campaign partners include Citizens Advice and MoneyHelper.
