Lloyds Banking Group has issued an urgent warning over the number of "advance fee" scams that have surged over the last year.
Advance fee scams happen when a victim is asked to pay an upfront fee for goods or services which then don’t materialise. People with a poor credit history may be particularly likely to be targeted as households feel the squeeze from cost-of-living pressures, the Mirror reports.
Creating fake ads for loans, jobs and rental properties are among the most common tactics currently being used by crooks. The average amount lost by victims in 2022 was £711, down from £1,194 in 2021, suggesting fraudsters may be pursuing a higher volume of lower value scams in the current economic environment.
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Cases have jumped by 82% over the last year and continuing to increase, according to the latest figures. Lloyds said its figures suggest people living in deprived areas may be particularly likely to report being scammed in this way, which matched analysed victim location data against the English Indices of Deprivation.
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People aged 25 to 34 were the most likely age group to report falling victim, followed by those aged 35 to 44. Loan fee scams are a particular concern as fraudsters will often target people on low incomes or with a poor credit history, Lloyds added.
Victims will typically reply to an online advert for a “fast loan” and are told they must pay an upfront fee by bank transfer. Once the fee is paid, the fraudster may ask for further payments. Eventually, the victim does not hear from the company again and the loan is never received.
Liz Ziegler, fraud prevention director at Lloyds Bank, said: "Fraudsters will ruthlessly adapt to any changes in consumer behaviour. With the increased cost of living putting more pressure on people’s finances, the recent surge in advance fee scams targeting those on low incomes or with a poor credit history is alarming."
Here are the bank’s tips to stay safe from loan fee scams:
1. Do research to ensure you are dealing with a real company. You can check firms using the Financial Conduct Authority’s website.
2. Remember that reputable lenders will conduct a thorough credit check before offering a loan.
3. You should not be asked to pay an upfront fee for a loan from a genuine company. If you are, it may be a scam.
4. If you are worried about your financial situation, talk to your bank first. They should be able to help or point you towards a reputable organisation that can.
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