Citizens Advice warns of fake loan scamPeople in debt conned out of cash for fake loans

16 June 2010

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Citizens Advice offer free and independent debt advice

Citizens Advice has warned consumers to beware of companies offering fake loans for a fee.

The companies advertise fake loans on the internet or sometimes in a cold call or text and often prey on people who are already in debt and desperate for a way out. They lure people in with the promise of quick and easy cash on favourable terms. 

Money upfront

Victims are persuaded to pay an upfront fee for the loan ranging, according to Citizens Advice, from £35 to a staggering £2,000 and in some cases to hand over their bank details too. But once the companies have the money they disappear leaving the victim out of pocket and without any loan.  

Avoid falling foul of a con with our video guide to spotting a scam.

People in debt are targets

The targets are people in debt or with poor credit histories who may find it hard to borrow money from mainstream lenders. One example reported by Citizens Advice involved a man with debts and a poor credit record who had already been refused a loan and who was e-mailed by a company offering him a loan of £20,000 at 10.9%.  He phoned to take up the offer but was asked to pay £70 upfront.  He paid this on his card but no loan has materialised.  

Teresa Perchard, Director of Policy at Citizens Advice said: 'In the recession, loans can be hard to get and people falling into debt or unable to get mainstream credit are being targeted.  We also fear that the public sector cuts to come could result in cutbacks in the vital local advice and regulatory services such as trading standards services, which people turn to for help in these situations. Rogue traders and rip offs like this which thrive in recessionary times could be off the hook if this happens'.

If you come across a scam, report it as soon as possible

Debt advice

Never pay money upfront for a loan and don't hand over bank details to cold callers.  Remember that if something seems to be too good to be true, it probably is. If you think you've been a victim of any kind of scam, contact your local Trading Standards department and report it to Action Fraud 0300 123 2040, the National Fraud Authority’s reporting line.

If you're in debt and need help, take a look at our guide on how to deal with debt. For debt advice contact Citizens Advice, National Debtline, the Debt Advice Foundation or CCCS.  

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