Loan fee fraud

Do you have a bad credit rating or need a loan quickly? Have you been asked to pay an upfront fee when applying for a loan or credit? Find out why this is probably a scam and how to protect yourself.

We are receiving an increasing number of reports from consumers who have been asked to hand over a fee – usually between £25 and £450 – when applying for a loan or credit that they ultimately never receive.

This is a scam known as 'loan fee fraud' or 'advance fee fraud'.

Spot the warning signs of loan fee fraud

  • You may have made several loan applications online and then be quickly contacted by text, email, or a call out of the blue and offered a loan.
  • You will be asked to make an upfront payment into a bank account, or transfer money via an unusual method e.g Western Union or iTunes vouchers.
  • The scammers may claim that the fee is refundable and will be used as a deposit, administrative fee, insurance or because of bad credit history.
  • You will normally be put under pressure to pay the fee quickly.
  • Once the initial payment has been made, the scammer will often contact you again to ask for further payments before the loan can be released. 
  • But regardless of the number of payments made, the loan never materialises.

Only deal with FCA authorised firms

Most businesses offering goods or services on credit or providing debt solutions and advice to consumers in the UK must be FCA authorised or have what we call ‘interim permission’.

Unfortunately, some firms or individuals act without our authorisation and some knowingly run scams.

How to protect yourself

  • When applying for a loan you should only deal with FCA authorised firms.
  • An FCA authorised firm will not ask you for an upfront payment before giving you a loan. If you deal with an unauthorised firm you won’t be covered by the Financial Ombudsman Service if things go wrong.
  • You should check our Financial Services Register to see if a firm is regulated by us, and check that the contact details are the same.
  • Always use the contact details on our register rather than a direct line or email they give you.
  • If there are no contact details on our register or the firm claims they are out of date, call our Consumer Helpline on 0800 111 6768.
  • Read more information on unauthorised firms and individuals and further steps on how to protect yourself from scams.

Report a scam

If you think you have been approached by an unauthorised firm or contacted about a scam, then you should report it to us by using our reporting form or contacting our Consumer Helpline on 0800 111 6768.

Further help

If you need advice on borrowing or debt you can visit the Money Advice Service.