The cost-of-living crisis has squeezed people’s finances tighter than ever this winter, with 3 in 5 lower income households struggling to cover basic needs like food and energy. The FCA (Financial Conduct Authority) have reported that internet searches for ‘no refusal payday loans’ have increased over 1900% over the last 12 months, but this spike in searches could be putting people at risk of loan fee fraud.
What is loan fee fraud?
Loan fee fraud is when someone who is looking for a loan is asked to pay an upfront fee before receiving it. They pay the fee, but never receive the loan. This type of fraud usually targets people who are looking for a loan online. The scammers will contact the victims, usually by email or text, to offer a loan after the fee has been paid. The victim may feel under pressure to pay the loan fee quickly so that they don’t miss out on the opportunity.
How do scammers target their victims?
Scammers will often target their victims through text, emails, or social media. When someone has used a loan website, or interacts with a social media post/page, they will be contacted by the scammers and tricked into paying the upfront fee. The emails and texts they use will often look like they are from a genuine company. They tend to target people who are on a lower income or have a poor credit rating.
Here are some of the steps you can take to protect yourself from loan fee fraud.
- Take you time. If you’re feeling like you are being rushed to make a decision – or pay a fee, then this could be a scam.
- If you’re being asked to pay a fee, do some checks to see if the company is genuine. Many companies don’t charge for taking out a loan.
- If you receive a text/email and you haven’t applied for a loan online, be aware that this could be a scam.
- Do some research before applying for a loan with a company. Is the company FCA registered? Do they have a physical address or contact details? Scammers will make it difficult for you to contact them. Can you find reviews for the company?
- Have you been guaranteed approval? No loan is ever guaranteed. A genuine company will check for affordability or do a credit check.
- If you are in any doubt – stop and don’t continue!
Remember do not share any of your personal details with anyone – even family or friends. This includes login details for apps such as your banking app or Nivo.
A genuine loan company will give you all the information you need before you accept and sign the loan contract. You should be able to get a free quote for the loan amount and duration.
At PCCU we can offer you a free no obligation loan quote. There are no set up fees and our dedicated, experienced staff are on hand to discuss the different borrowing options.