Being a victim of fraud can happen to even the most vigilant of individuals, thanks to more sophisticated ways that those looking to scam you will try. Whilst sometimes it may appear obvious when something isn’t quite right, other times you may not realise until it is too late. One type of fraud that has been seen over the last few years is loan fee fraud, where a fraudster pretending to be a lender asks for an upfront fee or similar to process a loan application. According to the Financial Conduct Authority (FCA), this was the third most reported scam in 2019, with 1 in 8 reports relating to this. As this can happen to anyone, here are 5 tips to help protect yourself.

1. Only use Authorised Lenders

The best way to protect yourself is to only borrow money from authorised lenders. If you are unsure if a lender is legitimate, you can search and find a list of FCA approved lenders. The lender themselves should also publish their authorisation number on their website, which you can check on the FCA register. If you are looking for bad credit loans UK lenders, those that are authorised will appear in the register too, providing peace of mind that you are dealing with the right people each time. Some loans do require an upfront fee, but if so, they will always send you notice first that includes important information that you need to understand and agree to first before continuing, including their legal name on the financial service register. It could be a scam if a lender doesn’t follow this process.

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2. Be Wary of Random Calls

If you receive a call from someone offering a loan, this will usually be a red flag. Similarly, if you receive an email or text doing the same. Even if you have made applications online recently, a scammer may try to take advantage of this by contacting you out of the blue and pretending to be them. If any received messages or calls like this happen, it is best to hang up and call back the lender you have applied through using their correct number. If of course you haven’t made any applications recently and you receive a strange message or call, it is best to avoid contact and report the source to the FCA.

3. The Reason for the Fee

The loan fee may sometimes have a different name, such as a deposit or admin fee and they may say it is refundable. If they ask you to pay into a bank account or other unusual way, this will be an indication of fraud. If you have poor credit, they may use this as justification as to why they need the fee paid. The fee can be a small amount such as £25 or even hundreds of pounds, so be wary of why they are asking for a fee and how they want it to be paid.

4. They May Try Again

It could be more than once a scammer will try to influence you to make the fee. Whereas they may call you once, not mention anything about a fee, and then call back on a separate occasion to do so. This can make the process seem more legitimate as the scammer won’t ask straight away, so be careful with any repeated calls, texts, or emails if you are not sure the loan being offered is from an authorised lender.

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5. Only Use Contact Details from the FCA

If you have received contact from a lender randomly, rather than contact them on the number they have provided, check on the FCA register they are correct. The register will have the correct contact details for all authorised lenders, so if a scammer is pretending to be one of them, check the number is registered. If it is a withheld number that calls, this is a red flag as you won’t be able to see the number and check. If in doubt, call the lender back through their official, registered details so you can be sure you are speaking to the right people.

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Article writer, life lover, knowledge developer and owner at youngmoneymakertips.com

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