I Spy a Scam – advance fee fraud and the short term, high interest loan broker

Advance fee fraud; It is the latest bright idea conjured up by scammers to take advantage of unsuspecting consumers. Meet the short term, quick, high interest loan broker, or brokerage firm. They are popping up all over the internet promising to find the best deal on payday or short term loans, and what they are really up to is to scam you into paying extortionate fees for a loan that never materialises. This is what the FCA (Financial Conduct Authourity) has dubbed ‘advance fee fraud’. These companies are known to scam people into paying anything from 50 pounds to 150 pounds in fees for a service that they never receive.

How these scamming firms operate is quite simple. You will receive unsolicited text messages or phone calls. How did they get your number? You left it on a random website and they procured your data. You will be offered a deal on a quick credit loan that is tempting and if you agree asked to deposit a ‘fee’ into a bank account. This is justified as a fee that is necessary to release the loan. A loan that you never receive. Often you will be contacted again, repeatedly, being assured that the loan is approved but that you need to make another deposit to release it. The scam continues as you make one deposit after another in anticipation of a loan that never manifests. Often these ‘companies’ pose as payday lenders, or are copying a bonafide consumer credit firm, using their name and details. This is known as a ‘clone firm’.

How can you tell one from the other? If you are wanting to take out a short term loan then be savvy about it. According to the FCA all businesses in the UK need to hold ‘interim permission’ or FCA approval to operate. In order to ascertain if a company is legitimate you can look it up on the FCA’s Consumer Credit Register or the Financial Services Register. All approved companies are listed there. Here are some tips on how to spot a scam.

Check the FCA register to find out if a payday lender is legitimate

  • Check the FCA’s register to see if the company is listed there. Beware of companies that claim that they are listed but that the register is not up to date.
  • Ring the company back, however, call them on the number listed in the register rather than a direct line that you have been given. Ask them for their FRN (firm register number).
  • Check the website address. Often these companies will use a website address that resembles a legitimate website as often these companies will make subtle changes that you don’t initially notice.
  • Fraudsters are quick to adapt and change their tactics to keep you hooked. Beware of companies that claim to be from overseas and companies that cold call you.
  • Check the list of unauthorized firms on the FCA register.
  • Finally report any suspicious activity to the FCA immediately.

It may sound simple to catch a scam before it happens to you, but often it is not. If you do your homework you will be able to spy a scam and avoid it happening to you.