Loan scam complaints up 50%

| August 22, 2011
Loan scam complaints up 50%

The Office of Fair Trading (OFT) is warning people to steer clear of scam loan companies that take upfront fees but fail to provide credit, or offer unsuitable credit alternatives.

The watchdog has seen a 50% year-on-year rise in complaints about loan scams, particularly credit applications that involve upfront fees sent through money transfer companies. It has therefore issued key “dos and don’ts” for consumers as follows:

Do be cautious if a loan company cold-calls you.

Do some research about the business offering the loan – look for phone numbers and physical addresses and ask for information in writing.

Don’t believe adverts which indicate a loan is “guaranteed”.

Don’t give out your card details “for security reasons” as the company may then debit your account without you knowing.

Don’t wire money to loan companies using money transfer services.

Don’t go ahead with a loan if a company approves it and then demands a fee before you get the money.

In June, the OFT published new draft guidance that gives people better protection when dealing with credit brokers and the watchdog is asking consumers who think they have been approached or tricked by an advance-fee loan scam to contact Consumer Direct.

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