Don't fall for advance-fee loan scams

“Hello Mr. Smith. Thank you for your loan application. We’re more than happy to give you a loan right now with no credit or background checks. Sounds good? Great! We just need an upfront fee paid immediately.”

Our Spidey-Senses are tingling, and yours should be too because Mr. Smith is about to fall victim to an advance-fee loan scam 😧 We don’t want that to happen to you.

With many people struggling to make ends meet right now, the last thing you need is to fall for a scam. But the cost of living crisis is seeing a rise in fraudsters taking advantage of people in vulnerable financial situations.

Remember, fraudsters are slick, persistent and will do everything they can to get their hands on your money or personal details. So if you think you’d never fall for a scam, think again.

Read on to find out what an advance-fee loan scam is, how to spot the warning signs and how to protect yourself.

What is an advance-fee loan scam?

Advance-fee loan scams target people who are looking to take out (you guessed it) a loan or credit card. People with a poor credit history, low income or who tend to have trouble being approved by lenders are particularly vulnerable to this kind of scam.

Recently, we’ve noticed a surge in the number of thinkmoney customers being targeted by advance-fee loan scams, especially as many people are looking to take out loans to help them financially.

Fraudsters contact their victims, seemingly out of nowhere, to offer them a loan that could solve all their problems. The catch is that they’ll ask you to pay an upfront fee. They may tell you the fee is a deposit or an admin fee and is totally refundable. ⚠️ Spoiler alert: it isn’t!

Like most scams, once you hand over your money the fraudster will vanish into thin air, taking your hard-earned cash with them.

How to spot an advance-fee loan scam 👀

• You’ve applied for loans or credit cards and you’re contacted quickly or out of the blue through text, email or a phone call.
• Loan or credit card adverts that sound too good to be true. Cue our favourite saying: if it sounds too good to true, it probably is!
• The ‘lender’ (aka fraudster) doesn’t care about your credit history, is willing to bypass a credit check and pretty much guarantees you a loan on the spot. Legitimate lenders would never do this.
• You’re asked to pay an upfront fee before you can get your ‘loan’. This should be your biggest red flag. No legitimate lender would ever ask you for an upfront fee.
• You’re put under pressure to pay quickly. This is a classic tactic. The fraudster will rush you into parting with your money, insisting you have to act now, barely giving you time to think.

What if I fall for an advance-fee loan scam?

If you miss the warning signs and are duped into an advance-fee loan scam, then the first thing we’d tell you is you’re not alone. There’s no shame in falling for a scam. Fraudsters are devious and smart, so it’s no surprise that people fall for their tricks.

💡 Your next step? Report, report, report.

Gather all information about the scam. Who you’ve been in contact with, why you’re suspicious, details of what you have provided them with (personal details or money), and how you’ve paid them. Find out who to report this too in our guide: How to report a scam

How to protect yourself

As much as we’d love them to, scams will never go away. The best way you can avoid them is to know how to protect yourself. Here are a few of our favorite tips:

• Watch out for too good to be true advertisements
• Don’t be intimidated into giving scammers your money
• Look out for dodgy addresses and spelling mistakes
• Don’t be rushed into parting with money or personal details

We go into a lot more detail on how to protect yourself from scams here. We’d urge you to have a read through. It could be the difference between walking away from a fraudster with your money intact or falling victim to a scam.

If you become suspicious about anyone who contacts you, always remember to stop ✋ and Take Five.

We understand that being a victim of a scam can be an incredibly distressing time. Please know that there is plenty of support and advice that can help you along the way, so don’t hesitate to talk to someone.