Bogus Loan Companies and Advance Fee Fraud

If you are in the process of applying for a loan, you could be more susceptible to being caught out. That isn’t to say that you are more likely to be scammed because you are applying for a loan, but there is a higher chance that you could believe that the offers are coming from a genuine lender, especially if you have applied for a loan with multiple companies.

This article will outline how these scams usually operate so you know what signs to look out for if you are ever targeted by a bogus loan company.

Cold Calls, Phishing Emails and Fake Adverts

The people behind bogus loan scams will often pretend to be from a legitimate lender or broker, or they will create an entirely new company name. 

They will lure in their victims through cold calls, phishing emails or fake social media adverts. They will use these methods to advertise very cheap rates and unbeatable service to bait as many people as possible.

Lack of Credentials

Any legitimate lender will have a secure website, genuine contact details and address, and must be authorised by the FCA (Financial Conduct Authority).

Scammers can create very genuine looking websites, but these are the things you should look out for. You can check whether the company is authorised by looking on the FCA’s Financial Services Register.

‘Guaranteed Loan’ Offer

The scammer will promise a ‘guaranteed’ loan offer to all applications, regardless of the applicant’s circumstances or credit history as their aim is to bait as many people as possible.

Legitimate lenders or brokers will need to know your credit record as the success of most applications with most lenders will largely depend on this information. Any mention of the word ‘guaranteed’ or a failure to even ask about your credit record should ring alarm bells.

Upfront Fees

Once you have contacted the scammer and discussed your loan requirements, they will request that you pay an upfront fee and claim that it is either a deposit and you will get the money back, or it is to cover administration costs (these are examples and there are many more). On average, this is a few hundred pounds and you will be promised that the loan will be paid out to you as soon as they receive the fee. Most scammers will put a lot of pressure on you to pay the fee quickly!

Once you have transferred the fee, there will be no sign of the funds. You may even receive further calls requesting more money. Soon after, the fraudsters will disappear with the money and become completely untraceable.

Unusual Method of Payment

Scammers will usually request for you to pay the fee via an unusual payment method, for example, a direct bank transfer or the value in iTunes vouchers. Other payment services like Western Union and PayPal have also been used. If you transfer money through any of these methods, it will be nearly impossible to trace or get back.

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