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 that don’t materialise.
Creating fake ads for loans, jobs and rental properties are among the most common tactics currently being used by crooks.
Cases of this type of fraud more than doubled in the past year, with victims typically losing around £200.
People can also be targeted by fraudsters when trying to secure a rental property or even a new job.
Victims lose an average £711 which is lower than the previous 12 months, recorded at £1,194.
Cases have jumped by 82% over the last year and continuing to increase, according to the latest figures.
It suggests fraudsters might be chasing a higher number of lower value scams in the current economic environment.
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."
Who is being targeted?
London saw the highest number of cases of advance fee scams in the UK last year.
But the West Midlands was a particular hotspot as, relative to population size, the number of cases reported was around 20 per cent higher than the national average.
Worryingly, new analysis also shows that those living in more deprived areas of the country are twice as likely to fall victim as those in less deprived areas, accounting for over 70 per cent of all advance fee scam cases.
Those aged between 25 and 34 are most likely to fall victim, followed by 35 to 44 year olds.
Collectively those two age groups make up around half, or 49 per cent, of all victims.
Fast loan scams
Loan fee scams are also a particular concern at the moment, as fraudsters will often target people on low incomes or with a poor credit history.
Reports of loan fee scams have more than doubled over the last 12 months, up by 105 per cent compared to the previous year.
Case numbers continue to rise sharply, with the average amount lost by victims last year recorded at £214.
Victims will typically reply to an online advert for a fast loan from a company they have never heard of, or sometimes the fraudster will pose as a genuine firm.
Their application will be approved regardless of their credit history and they are told to pay an upfront fee by bank transfer before they receive the loan.
Once this fee is paid, the fraudster might even ask for further payments.
Eventually, the victim does not hear from the company again and the loan is never received.
Some common reasons the scammers give to explain why the advanced payment needs to be paid include:
- Payment release fee
- Insurance fee
- Verification fee
- Loan company fee
- Processing fee
- Guarantor fee
- Tax payment
Ms Ziegler added: "The important thing to remember is that a genuine lender will always conduct thorough credit checks prior to agreeing a loan and won’t ask for an upfront payment before releasing the funds.
"If you’re concerned in any way about your finances there are lots of reputable organisations that can help, and it always makes sense to speak to your bank first.
"The abundance of these fake online ads reinforces the importance of the government’s Online Safety Bill to ensure social media sites and search engines stamp out fraudsters operating on their platforms."
How to stay safe from loan fee scams
- Do your research to ensure you’re dealing with a real company
- Avoid any company that says they can guarantee you a loan regardless of your credit status. A reputable lender will always conduct a thorough credit check.
- You shouldn’t be asked to pay an upfront fee for a loan from a genuine company. If you are, it’s likely a scam.
- If you’re worried about your financial situation, speak to your bank first. They should be able to help, or point you towards a reputable organisation that can.
