Warning over potential loan scams - Loans - News - Moneyfacts


Warning over potential loan scams

Warning over potential loan scams

Category: Loans

Updated: 14/12/2012
First Published: 23/08/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

People have been warned to steer clear of scam loan companies which take upfront fees but fail to provide credit or offer unsuitable alternatives.

The Office of Fair Trading (OFT) has decided to alert consumers after seeing a 50% year-on-year rise in complaints about loan scams, particularly credit applications which involve the consumer 'wiring' or sending upfront fees through money transfer companies.

Complaints to the OFT-managed advice service Consumer Direct increased from 2,059 between 1 July 2009 and 30 June 2010 to 3,167 during the same period in 2010-11.

As a result, the OFT is advising people to be vigilant when dealing with or taking calls from loan companies that want upfront fees, but which are not interested in the
consumer's credit history.

"We advise people to check out the company carefully before agreeing to anything, including asking for a landline number, a physical address and doing a search about the company online, as well as checking that they have a valid credit licence," said David Fisher, OFT director of the consumer credit group.

"If consumers think they have been approached or tricked by an advance-fee loan scam, they should report it to Consumer Direct."

In June the OFT responded to a super-complaint from Citizens Advice by publishing new draft guidance that gives people better protection when dealing with credit brokers.

The regulator said it would close down rogue credit brokers, and wants to change the regulations so that consumers would be given the opportunity to have fees refunded if loans were not made.

It also agreed to lobby the Government to change the law so credit brokers could not demand upfront fees in exchange for arranging loans.

Find the best loan for you - compare loans

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Get a record low rate loan - if you qualify

Competition in the personal loans market is as hot as ever, so much so that one loan provider has slashed rates to the lowest on record – but only to those who fit the bill. The shopping bill, that is…

Competition returns to loans, but stalls in cards

Our recent figures reveal a mixed picture in terms of unsecured lending, as while competition appears to have returned to the loans market, it’s notably slowed in the credit card sector.

How to improve your credit score

Are you thinking about applying for credit? If so, you need to make sure your credit score is in order.