The UK Financial Conduct Authority (FCA) says that loan fee scams is now the most common scam in financial services topping investment fraud. The shift is largely due to the emergence of online lending as victims are targeting while searching for loans on the internet. The fraudsters frequently tell their targets that an upfront fee is required to receive a loan – and the loan is never provided.
“We’re seeing an increasing number of cases of loan fee fraud reported to us. Fraudsters target people making online loan applications and who think they’re being contacted by a legitimate loan provider, when they are not at all,” says Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA. “Scammers take advantage of the excitement people feel when they are offered or accepted for a loan and make the loan conditional of an upfront fee, which can increase to hundreds of pounds. Of course, no loan ever materialises.
For 2017, £3.5 million was lost to loan fee fraud. The FCA says that calls to the consumer helpline regarding this type of fraud jumped by 44% versus year prior. There were more than 4700 cases of loan fee scams during 2017. The average loss was pegged at £740 per scam.
As is the case, the fraudsters target the most vulnerable individuals – typically people of lower income and who have limited access to credit options.
The FCA cautions individuals to be certain they are dealing with FCA approved lending providers and to never pay a fee in advance.