FCA issues loan-fee fraud warning

FCA issues loan-fee fraud warning

The Financial Conduct Authority (FCA) has issued a warning against loan fee fraud.

Enquiries into the FCA’s contact centre about all types of scams were up 24% as a whole in June 2022 from a year earlier. In particular, reported loan fee fraud scams into the FCA’s contact centre were up 36%.

The scam targets individuals seeking a loan but are lacking in credit-rating or other criteria to be eligible to apply to a reputable lender. Applicants pay a fee to apply and receive the loan, however, upon paying they are left without the loan they were promised and in a worse financial situation.

The FCA has issued a joint statement warning of this scam. Mark Steward, executive director of enforcement and market oversight and Sheldon Mills, executive director of consumers and competition, 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.

“One type of scam that we are receiving a lot of calls about is loan fee fraud. This occurs when people pay an upfront or advance fee for a loan they never receive.

“We have relaunched our loan fee fraud partner campaign activity. It aims to raise awareness of the warning signs associated with this scam, to help consumers spot and avoid this type of fraud.

“The warning signs include: if you are asked to pay an upfront fee, if you’re asked to pay quickly or to pay in an unusual way, such as vouchers or money transfer, then it could be a scam.

“We strongly encourage anyone considering taking out a loan to check who they’re dealing with on the FCA Register. Visit the FCA’s loan fee fraud webpage to find out how to check and for more information.”

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