Yahoo Finance Lloyds Bank warns customers on rising advance fee loan scams
Lloyds Bank (LLOY.L) has issued an urgent warning to customers as the number of 'advance fee' loan scams has surged in recent months.
Loan scams happen when a victim is asked to pay an upfront fee for a loan, the bank said on Monday.
Reports of this type of fraud have already increased by more than 90% in 2022, with the number of cases continuing to jump sharply. Lloyds said that victims lost £231 on average.
Customers who fall into this trap will typically reply to an online advert for a "fast loan" from an organisation they have never heard of before, although sometimes fraudsters try to impersonate a genuine company.
Scam victims who are contacted will often have their application approved regardless of their credit history.
Read more: Scam victims face 'hefty' call fines as banks charge for helplines
However, before victims receive the loan, they are told they must pay an upfront fee by bank transfer.
Once this fee is paid, scammers could ask for further payments, with customers eventually never hearing from the firm again and the loans never received.
Some common reasons given by the fraudsters for these payments in advance include:
Payment release fee
Verification fee
Loan company fee
Processing fee
Guarantor fee
Tax payment
Liz Ziegler, retail fraud & financial crime director at Lloyds, said: "Organised crime gangs will ruthlessly exploit any change in consumer behaviour. We saw that during the pandemic with the surge in purchase scams as certain goods became scarce and more people shopped online.
Read more: Nearly £2bn lost to fraud as scams target the young
"Now, as living costs rise, fraudsters are increasingly turning to advance fee scams. They know that some people will need more support with their money, and victims in these cases often have a poor credit score or may already be in financial difficulty.
"The important thing to remember is that a genuine loan company will never ask for an upfront payment before releasing the funds. If you’re concerned in any way about your finances there are lots of organisations that can help, and it always makes sense to speak to your bank first."
