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How to avoid loan fraud

We've all seen the headlines about fraud and how someone perfectly sensible has succumbed to the scammers. This just shows – it could happen to anyone, even if you think you're too savvy to get caught out.

When you're in need of cash, even the soundest of judgements can slip. Here's how to avoid being another victim to fraudsters.

Shakila Hashmi From the Money team
minute read

6 tips to protect yourself from fraud

There's one golden rule, "if something sounds too good to be true, it probably is". We wish it weren't the case because we all want something for nothing and sometimes you want to believe the hype. Here are some top tips:

  • Beware upfront fees – Genuine brokers can charge you an upfront arrangement fee but if you don't take up the loan or cancel the arrangement within 6 months then you should get a refund.

  • Be cautious of initial instalments – If you're asked to pay the first month's instalment, don't expect the loan to come anytime soon – lots of scams involve asking you to part with cash and then leave you high and dry.
Avoiding loan fraud
  • Pay attention to warning signs – if you get texts asking you to call or emails out of the blue asking if you want a loan then pay careful attention as it could be a scam trying to lure you to a fraudulent website. Spelling and grammar mistakes in letters and emails always sound a warning bell, but some fraudsters are getting cleverer, so a fake may be perfectly spelled. Also, any lenders that don't carry out credit checks are best avoided too as they are not likely to be legitimate.

  • Check, check and check again – Check credentials, call the lender with an authenticated number to verify phone numbers and read customer reviews. Lenders and brokerage firms also need to be registered with the Financial Conduct Authority (FCA) and they should show their registration number on their website or paperwork, check this number against the FCA's financial register.

  • Scammers are smart, so be smarter – Fraudsters are clever and it's how they make money. Some will even use the name or address of genuine companies, send you phishing emails or set up fake web pages. If there's any doubt in your mind, check addresses and if you're on the phone, hang up and call the main telephone number of the company in question and find web addresses for yourself.

  • Be wary of disclosing details – If you're not expecting to part with your details, then don't. Banks will not ask you for confidential details or security information such as your account numbers, password or PIN on the phone or via email.

If you've got elderly relatives it's probably worth discussing possible fraud with them and warning them, as older people can be specially targeted by scammers.

For more advice on preventing fraud see Financial Fraud Action UK and Action Fraud .

Help! I’ve been scammed, what should I do?

If the worst should happen, here's what to do:

  • Report the incident to Action Fraud: www.actionfraud.police.uk who are the UK's national fraud and cyber crime reporting centre. They'll be able to offer help and advice.
  • If you've been asked to pay brokerage fees but there's still no sign of a loan on the horizon within six months, then you can ask for your money back.
  • Contact the broker directly and if they aren't helpful then you should contact the FCA on 0800 111 6768.
  • Don't get caught twice. Some fraudsters contact victims of fraud pretending to be the police or a law agency that claim to be able to help you get your money back, but ask for a fee up front. This is known as Fraud recover fraud.
Avoiding loan fraud

Where can I find a loan I can trust?

Whether you're looking to borrow just a small amount of money or you're contemplating a loan to improve your home or get a car – we can help. You can also get the jargon around loans deciphered and discover what happens in a credit check.

We can save you time as we can compare lots of loan providers so you don't have to check out lots of different potential lenders separately. See more on personal loans .

But if you're ready to get stuck in then let's start comparing loans right now.

Avoiding loan fraud

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