Don’t fall victim to fraudsters making fake loan offers, warns watchdog | Personal Finance | Finance
People worried about their finances are falling victim to fraudsters making fake offers of loans.
The Financial Conduct Authority found that 24 percent of people in a survey last month turned to credit or loans to help fund their summer spending.
Loan fee fraud, where someone pays a fee for a loan they never receive, typically leads to a £260 loss.
The regulator said its data indicates that last summer there was a 26 percent increase in complaints from consumers who had fallen victim to loan fee fraud compared with 2021.
This year, the rising cost of living coupled with summer spending pressures, could increase the risk of loan fee fraud, the FCA warned.
Some 70 percent of parents with children aged under 18 who were surveyed said they are worried about their personal finances.
The FCA said that cold calls, emails out of the blue, or up-front fees could be signs of a scam.
Other warning signs include being put under pressure to pay quickly. If people need to apply for a loan, the FCA urges them to check the information on its website.
It said they should watch out for scammers who try to imitate legitimate firms by using similar names and copying their branding.
Steve Smart, executive director of enforcement and market oversight at the FCA, said: “For many, summer brings with it the chance to relax and unwind but it also brings with it financial pressures –from holidays and festivals to funding days out, or out-of-term childcare for parents.
“With inflation, energy costs and rising mortgage bills, this summer spending will come at a time of enhanced vulnerability for many.
“For fraudsters, this provides the perfect opportunity to take advantage of people considering how to make ends meet over the summer months.”
If someone deals with an unauthorised firm, they will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme if anything goes wrong.