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Protection against advance fee loan scams

Derbyshire Constabulary are asking: Have you been asked to pay an upfront fee for a loan? It could be an advance fee scam.



The constabulary state that 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  • If there are no contact details on the FCA register or the firm claims they are out-of-date, please call their Consumer Helpline on 0800 111 6768.


How to report loan scams


If you have been targeted by a scam, please call Action Fraud on 0300 123 2040 or visit www.actionfraud.police.uk.


Please note: If debit cards, online banking or cheques are involved in the scam, your first step should be to contact your bank or credit card company.



Reporting

Report all Fraud and Cybercrime to Action Fraud by calling 0300 123 2040 or online. Forward suspicious emails to report@phishing.gov.uk. Report SMS scams by forwarding the original message to 7726 (spells SPAM on the keypad).


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