The Financial Conduct Authority (FCA) has issued 3 Wise Warnings for consumers as fraudsters attempt to steal two-thirds of the average gift spend over the up and coming Christmas period.
According to the FCA, last December loan fee fraud was the third most reported scam. This is where consumers will be asked to pay a loan fee upfront for a loan or credit that they will never receive.
The FCA said: “In all of its scam reports 1 in 8 (12%) was for loan fee fraud”.
New research reveals people spend an average of £355.00 on Christmas presents and the average loan fee scam could cost consumers £220.00 each and a loss of 62% that’s nearly a two-thirds of what would have been under the tree.
25% of people plan this Christmas to spend more than normal, rising to 34% among those who due to the coronavirus pandemic had faced financial hardship such as being furloughed or a loss of income, which means the hit could be harder.
To help people protect themselves against scams this Christmas season, the FCA has issued “3 Wise Warnings”.
If you spot any of these, they are a clear warning sign that a loan fee fraud is taking place.
Two-thirds (65%) of people said “If they were approached by a scammer, they could confidentiality spot a loan scam.
1 in 4 (28%) said “They would secure a loan pay an upfront fee”. This being one of the main warning signs of loan fee fraud. Rising to 54% for 24-34 year olds, who are most likely to be hit by this type of fraud.
Loan fee fraud scams could be higher this December, as studies show that possibly 60% of people will turn to borrowing to pay for their additional Christmas spend having experienced financial difficulty due to the coronavirus pandemic, such as furlough, workload or pay cuts and job loss. These people could be more susceptible to loan fraud.
Nearly, two-thirds (65%) that have faced financial hardship answered questions in a survey and asnwered yes to “Falling for a scam at Christmas would be worse than any other time of the year”. 64% also responded “Being a scam victim in 2020 would be worse than any other year”.
Executive Director of Enforcement and Market Oversight at the FCA, Mark Stewart said: “Fraudsters will seek out every opportunity to exploit vulnerable people and this December will be different to previous years, as many people will be entering the festive season and end the year financially impacted due to the pandemic”.
Th FCA added: "Anyone seeking a loan for any reason, needs to watch and spot warning signs and warned before taking out a loan, that we check the firm's details to make sure it is authorised to provide credit with the FCA’s register”.