Fast Loan Fraud: How it works and why Lloyds Bank is giving a strong warning

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Fast-track loan scam targeting those struggling with soaring cost of living and Lloyds issues ‘urgent warning’: Here’s how it works…

  • Scammers pretend to approve loans and demand cash before paying out
  • Victims lose an average of £231 from the ruse
  • Reports of this type of scam have increased by 90% this year

Desperate Brits are lured into losing money in a quick loan scam that has skyrocketed thanks to the cost of living crisis.

With the number of cases up 90 per cent so far this year compared to the first five months of 2021, Lloyds Bank has issued an urgent warning to customers to remain vigilant.

Scammers running this “advance” scam set up online ads for fake companies or pose as real companies offering quick loans to snare unsuspecting victims.

With bills mounting, those struggling are likely to be tempted by these ads offering short-term fixes.

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Scammers approve loan applications and then claim that the victim must send them cash before they can receive the loan.

Applicants who click on ads are “approved” for the loan regardless of their credit history, but are then told they must make a prepayment via bank transfer before receiving the money.

Once this fee is paid, the victim can be asked for more money from the fake loan company until they become suspicious.

Ultimately, the victim never receives the loan and never hears from the company again.

Some of the most common reasons scammers give for needing an upfront payment are: verification fee, processing fee, or guarantee fee, and as always when it comes to scams, criminals know how to appear convincing and genuine.

They have also been known to require payment to be made directly to the lending company for a fee or a tax payment.

The Financial Conduct Authority warns that in some cases victims have been contacted out of the blue by scammers by text message, email or phone to offer a loan.

According to Lloyds, the average victim loses around £231 from the scam.

Do you think you are being scammed? Here’s what to do

• Stop: Before parting with your money or information, to protect yourself, take a moment to stop and think.

• Challenge: Could it be fake? It’s okay to deny, deny, or ignore requests. Only criminals will try to rush or panic you.

If the caller claims to be from a well-known organization and you are suspicious, find a contact number on their official website and contact them to verify the call

• To protect: If you think you’ve been scammed, contact your bank immediately and report it action cheating

Liz Ziegler, head of retail fraud and financial crime at Lloyds Bank, said: “Organized crime gangs will ruthlessly exploit any change in consumer behavior.

“We saw this during the pandemic with the rise in purchase fraud when certain goods became scarce and more people shopped online.

“Now that the cost of living is rising, scammers are increasingly turning to advance fee fraud.

“They know that some people need more support with their money and the victims in these cases often have bad credit or may already be in financial difficulties.

“It’s important to remember that a real lending company will never ask for an upfront payment before releasing the funds.

“If you’re concerned about your finances, there are many organizations that can help you and it always makes sense to speak to your bank first.”

When applying for a loan, the FCA advises customers to check that the company’s contact details match those on theirs Financial Services Register.

If this is not the case, or you still have concerns about the company, contact the FCA on 0800 111 6768. Or contact action cheating.

Between April 2020 and March 2021, Action Fraud received 91,593 reports of application fraud, including advance payment schemes.

In total, £2.35 billion was lost to fraud in 2021, according to Action Fraud.

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