Consumers should be especially careful this Christmas, as loan scams (fake loans) are on the rise.
With Christmas just around the corner, fraudsters are trying to exploit people who may be facing financial difficulties by promising non-existent loans . The UK 's financial regulator has issued a warning about a surge in this fraudulent activity.
The Financial Conduct Authority (FCA) conducted a survey of 2,000 British consumers last month. The survey found that rose scams fraudulent loanThis figure does not include cases reported to the FCA but where the scam was successfully avoided.
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Victims often receive a phone call, text message , or email out of nowhere offering them a loan. They are then pressured to pay a “down payment” or “admin fee” in order to proceed. Unfortunately, there is no loan and the scammers simply take the victims’ money. In fact, after the initial deposit, the scammers may ask for more money to proceed with the loan.
This tactic is more likely to be successful during the holidays, when people struggle to buy gifts due to high inflation and daily living expenses.
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Being approached by a stranger offering a loan is suspicious in itself. Another sign, however, is a demand for a down payment. Do not give money to unknown borrowers who approach you online.
According to the FCA, two-fifths of consumers feel pressured by family and friends to spend money on gifts this festive season, as usual, while a third are worried about how they will cover the costs. Almost one in eight said they plan to take out a loan.
However, the regulator claimed that almost two-thirds (64%) of consumers are unaware that there are many scams involving supposed loans and only a fifth (22%) can spot the warning signs.
This festive season, the FCA is launching a public awareness campaign to help consumers avoid loan-related scams this Christmas.
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“In a time of heightened stress and pressure, fraudsters and rogue lenders will pressure consumers into making bad decisions,” said Mark Steward, a key member of the FCA, stressing that consumers should pay attention to red flags related to loan fraud.
"If you are considering taking out a loan, please stop and check the FCA Register to make sure you are dealing with a legitimate lender. Don't let fraudsters be the ones enjoying Christmas this year," the regulator says.
Source: www.infosecurity-magazine.com
