Asked to pay an upfront fee for a loan? It could be an advance fee scam.
Advance fee loan fraud is one of the most common types of scam reported to the Financial Conduct Authority.
This type of scam often targets people who are searching for online loans, where individuals are asked to pay an upfront fee for a loan, and the balance is never received. Often, the people that are targeted have limited access to mainstream credit, have a low income or a low credit rating.
Some people have been persuaded to make several fee payments, before realising it is an advance fee scam.
Common signs to spot
You may have made several loan applications online and then been contacted out of the blue by text, email or phone call offering a loan.
Someone asking you to pay an upfront advance fee. Often, individuals are told that this fee is refundable and will be used as either a deposit, administrative fee or as insurance due to the victim's bad credit history.
Being asked to pay various follow-up fees, in order to get the loan.
The fraudster will try and put you under pressure to pay quickly - normally through a bank transfer, or they may ask you to pay in an unusual way, for example, through vouchers, Western Union or MoneyGram.
Ways to protect yourself
If you take out a loan with an unauthorised firm, you won’t be covered by the Financial Ombudsman Service if things go wrong, so it's important to follow the following steps:
Before you take out a loan, check the firm is authorised by the FCA, you can do this by checking the Financial Services Register to make sure the contact details provided by the firm match the details on the register. You can do this here: https://www.fca.org.uk,
Always use the contact details on the FCA register, rather than a direct line or email given to you by the loan firm.
If there are no contact details on the FCA register or the firm claims they are out-of-date, please call their Consumer Helpline on 0800 111 6768.