City watchdog warns Britons to be ‘ScamSmart’ this Christmas as borrowers fall victim to soaring rates of loan fee fraud Loan fee fraud involves a person paying a stipend for a loan they never receive The Financial Conduct Authority said most Britons were unaware of this swindle Being pressured to repay promptly is a common warning sign of loan fee fraud By Harry Wise For This Is Money Published: 02:50 EST, 14 December 2022 | Updated: 03:57 EST, 14 December 2022 e-mail View comments Britain’s financial services regulator has launched a new campaign urging the public to avoid falling victim to loan fee fraud. The Financial Conduct Authority said the worsening cost-of-living crisis meant more people were likely to borrow money over the festive period to indulge on gifts and food, putting them at greater risk of scammers. Cases of loan fee fraud, whereby a person pays a commission for a loan they never receive, have already surged by 21 per cent from the previous year, according to the regulator’s research. Warning: Cases of loan fee fraud, whereby a person pays a commission for a loan they never receive, have already surged by 21 per cent from the previous year, according to the FCA Consumers lose £260 on average to such scams, more than half the amount they anticipate spending on Christmas presents this year, marking a costly blow to those on tight budgets. Yet the FCA said most Britons are unaware of this swindle, and only around one-fifth would be able to identify all its warning signs, which include being contacted suddenly by text or phone after making numerous loan applications online. Other red flags to watch out for range from being pressured to repay quickly, or claiming the fee is refundable and will be used as a deposit or insurance. RELATED ARTICLES Previous 1 Next City watchdog bites back against dubious financial ads that… FCA admits it was ‘not prepared’ for pensions chaos after… City watchdog slams proposals which would give Government… City watchdog sends weekly survey to lenders to monitor… Share this article Share As part of its ‘ScamSmart’ campaign, the FCA wants Britons to gain better understanding of loan fee fraud and check its register whenever they are told to provide an upfront payment when borrowing money. More than one-in-eight Britons plan to take out a loan to support their Christmas spending, according to the FCA. It comes at a time of skyrocketing prices, exacerbated by the loosening of Covid-19 restrictions and the Ukraine war’s escalation, which are causing an immense squeeze on consumer incomes. Mark Steward, the executive director of enforcement and market oversight at the FCA, said: ‘This Christmas period is going to be tough for many consumers, and those who have been hardest hit by the rising cost of living will understandably be anxious about meeting the additional expenses that Christmas brings. THIS IS MONEY PODCAST Could house prices really fall 20% and how bad would that be? ‘Some consumers may be tempted to take out loans to meet these extra costs. Unfortunately, this is where loan fee fraud scammers and illegal lenders see an opportunity.’ The FCA also warned that grifters are preying on shoppers making impulsive purchases during the Christmas season as time pressure often leads to ‘poorer and riskier choices’. Its analysis found that almost half of Christmas shoppers are more likely to buy a present with a limited-time offer, but 41 per cent admitted acquiring a last-minute gift they later regretted. ‘At a time of heightened stress and pressure, scammers and illegal lenders will rush consumers into bad-decision making,’ Steward added. DIY INVESTING PLATFORMS Stocks & shares Isa Stocks & shares Isa Easy investing Capital at risk. Isa rules & T&Cs apply. Investment ideas Free fund dealing Free fund dealing 0.45% account fee capped for shares Flat-fee investing No fees £9.99 monthly fee One free £5.99 trade per month Social investing Commission-free Share investing 24+ million global community Model portfolios Investment account Free fund dealing Free financial coaching Affiliate links: If you take out a product This is Money may earn a commission. 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Published on : 2022-12-14 07:54:21
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