Citizens Advice is warning people to beware of companies offering fake loans for a fee.
Speaking at the Trading Standards Institute’s national (UK) annual conference in Edinburgh today on the potential impact of cuts in public expenditure on consumers, Citizens Advice director of policy Teresa Perchard said there was growing evidence of CAB clients losing substantial sums of money to bogus loan companies.
She said recessionary pressures are leaving the way wide open for such scams, and cutbacks in public services could allow rogue traders to flourish.
The fake loans are advertised on the internet or sometimes offered in a cold call or text. The sales pitch lures victims in with the promise of quick and easy cash on favourable terms.
They are persuaded to pay money up front as a set-up fee – sums reported by Citizens Advice Bureau clients range from £35 to £2,000 – and often asked to hand over their bank account details too. The loan they have been promised then fails to materialise, the loan company often cannot be contacted, and the money already paid is usually lost for good.
The targets are people in debt or with poor credit histories who may find it hard to borrow money from mainstream lenders.
Perchard said: “In the recession loans can be hard to get and people falling into debt or unable to get mainstream credit are being targeted with ads and direct contacts offering loans that really are too good to be true. We are seeing people who have lost hundreds of pounds they can ill afford after paying fees in advance for a non-existent loan. Some have also had their bank accounts raided after handing over their account details.
