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Lloyds Bank issues urgent warning as advanced fee fraud rises 82%

Rebecca Goodman
Written By:
Rebecca Goodman
Posted:
Updated:
24/01/2023

Lloyds Bank has sent out a warning to customers after a rise in the number of ‘advance fee’ scams it has seen in the last year.

It said cases of this type of fraud have risen 82% in the last 12 months and are continuing to rise.

These scams happen when someone is asked to pay upfront for something that then doesn’t exist, such as a loan or even a job.

The average amount lost is £711 which is a fall from £1,194 lost on average by victims in the previous year.

The bank suggests that criminals are now carrying out more scams but taking less money from each of their victims. 

It says fraudsters are taking advantage of the cost-of-living crisis which is making more people vulnerable to financial fraud. It comes as research shows the majority of people have seen an increase in the potential scams they’ve received.

The highest number of victims are in London

The bank said London saw the highest number of advance fee scams and the West Midlands was a hot spot as cases in the area were 20% higher than the national average.

Those living in deprived areas were twice as likely to fall victim, accounting for over 70% of victims. 

Younger people, aged between 25 and 34, were most likely to be a victim of this type of fraud, followed by those aged 35 to 44.

Loan fee scams rise by 105%

In the last 12 months, reports of loan fee scams were up by 105% compared to the previous year. 

Cases of this type of fraud, which typically targets those on low incomes and with poor credit scores, are continuing to rise sharply.

This type of advanced fee scam usually sees victims applying for something called a ‘fast loan’ from a company they’ve never heard of, or in some cases criminals will impersonate a genuine company. 

These criminals ask for a fee to be paid in advance so they can receive a loan, which usually never materialises. Further payments may also be requested, in exchange for the loan, which the victim never sees. 

Common names for the type of fee requested include the following:

  • Payment release fee
  • Insurance fee
  • Verification fee
  • Loan company fee
  • Processing fee
  • Guarantor fee
  • Tax payment

‘Alarming’ surge in advance fee scams 

Liz Ziegler, fraud prevention director at Lloyds Bank, said: “Fraudsters will ruthlessly adapt to any changes in consumer behaviour and, with the increased cost of living putting more pressure on people’s finances, the recent surge in advance fee scams targeting those on low incomes or with a poor credit history is alarming.

“The important thing to remember is that a genuine lender will always conduct thorough credit checks prior to agreeing a loan and won’t ask for an upfront payment before releasing the funds. 

“If you’re concerned in any way about your finances there are lots of reputable organisations that can help, and it always makes sense to speak to your bank first.”

How to avoid becoming a victim of an advance fee scam

Fraudsters are forever coming up with new ways to con people out of their money, yet there are ways to lower your risk of becoming a victim. They include the following:

  1. Do your research to ensure you’re dealing with a real company. You can check using the FCA’s website – only contact firms using the details listed there.
  2. Avoid any company that says they can guarantee you a loan regardless of your credit status.
  3. You shouldn’t be asked to pay an upfront fee for a loan from a genuine company.
  4. If you’re worried about your financial situation, speak to your bank first.