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 may be a scam and how to protect yourself.

Coronavirus (Covid-19): A major event like coronavirus can initiate new types of scam activity. Find out about potential scams, how they could affect you, 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 been contacted by text, email, or a call out of the blue and offered a loan.
  • You may 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 may be put under pressure to pay the fee quickly.
  • Once the initial payment has been made, the scammer might 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.

How to protect yourself

  • When applying for a loan you should only deal with FCA authorised firms. 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 the firm is regulated by us, and check that the contact details provided by the firm match the details the register.
  • 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  • If there are no contact details on our register or the firm claims they are out of date, call our Consumer Helpline on 0800 111 6768.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.

How loan fees work with authorised firms

  • If you are asked to pay an upfront fee before getting a loan from an authorised firm, the firm should send you a notice setting out certain information. 
  • The notice should include the legal name of the firm as it appears on the Financial Services Register and a declaration that the firm is acting as a credit broker. The notice should also include a statement saying that you will, or may need to pay a charge for the firm’s services, the amount of the charge or how it will be calculated and when and by what method the firm will take payment of the charge. 
  • It is also necessary for you to reply to the notice acknowledging that you have received it, and confirming that you are aware of its contents. 
  • If you are asked to pay an upfront fee from a firm who doesn’t follow the above process, it could be a scam. 

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.