Banks say reports of loan fee fraud are on the rise

Data from Lloyds Bank shows an increase in fraud where victims are asked to pay up front for goods and services.

P.Those with poor credit histories can be particularly targeted as household budgets are strained by the pressure on the cost of living.

The number of ‘advance payment’ frauds reported to Lloyds Banking Group by customers increased by 82% in 2022 compared to 2021.

The average victim has lost £711 in 2022 from an average of £1,194 in 2021. This suggests that scammers are pursuing more and lower value scams in the current economic environment.

According to Lloyds, the numbers show that people living in poor neighborhoods are more likely to be scammed this way. We matched the analyzed victim location data with the UK deprivation index.

Scammers often target low-income earners and people with bad credit histories.Liz Ziegler, Lloyds Bank

Ages 25 to 34 were the most reported age group among victims, followed by ages 35 to 44.

Lloyds added that loan claim fraud is of particular concern because scammers often target low-income earners and those with poor credit.


In the past 12 months, credit fraud reports have more than doubled from the previous year, he said. The average amount his victims lost last year was £214.

Victims often respond to online advertisements for “quick loans” and are told to pay upfront via bank transfer.

After the fee has been paid, the scammer may charge additional fees. Ultimately, the victim never hears from the company again and never gets a loan.

In one case Lloyds saw, a woman was looking for a loan on the Internet after receiving a bill for car repairs.

He later received an unsolicited WhatsApp message from someone who offered a £1,300 loan without a credit check.

He was told that he had to pay £120 in the first month by bank transfer to secure the loan.

Shortly after, he was asked to pay an additional £199 for ‘payment protection insurance’ in case he lost his job.

An attempt to pay £199 was blocked by the bank and a WhatsApp collaborator asked to transfer the money to another account.

The woman became suspicious and demanded a refund of the original £120 payment, but the money was lost.

Liz Ziegler, Director of Fraud Prevention at Lloyds Bank, said: Low Income. Poor income and credit history are concerns. “

Here are some bank recommendations to protect against loan fee fraud:

1. Do your research to make sure you’re dealing with a real company. You can verify companies using the Financial Conduct Authority website.

2. Remember that reputable lenders do a thorough credit check before taking out a loan.

3. No need to prepay loans from real companies. If so, it could be a scam.

4. If you have any concerns about your financial situation, please contact your bank first. They should be able to refer you to reputable organizations that can help you.

Author: Vicky Shaw, PA Personal Finance Correspondent

Source: Belfast Telegraph

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