Loan Scams Increasing, OFT Warns

The Office of Fair Trading has received a 50% rise in complaints about loan scams and is warning borrowers to be extra vigilant before applying for a loan online.

The OFT is warning potential borrowers that there are a number of scam loan companies operating that ask for up front fees and do not require an applicant’s credit report.

As the rising number of complaints show, these companies then fail to pursue the application once they have received the up front fee, leaving the applicant out of money, often when they can least afford it.

It is not only applicants applying online that are at risk from these tactics. The OFT has received complaints from people who have also received call telephone calls, applied and then lost their application fees when the company disappears.

Borrowers should be taking care to ensure that they are dealing with a bona fide loan company, as David Fisher, OFT Director of the Consumer Credit Group advises:

“We advise people to check out the company carefully before agreeing to anything, including asking for a landline number, a physical address and doing a search about the company online, as well as checking that they have a valid credit licence.”

For advice on loan scams or any other consumer issues loan applicants can call Consumer Direct on 08454 040506 or visit www.direct.gov.uk/consumer.

MoneyHighStreet Comments: This sounds like nasty tactics from some ruthless scammers that hit people who need to borrow money, who are often in a difficult financial position.

Luckily, not all loan companies who don’t require credit checks are scammers. Borro, for instance, offer short term loans using valuable items such as watches, jewellery and original art as collateral and don’t ask for a credit report.