Complaints about loan scams still increasing
August 23rd, 2011
Concerning news this week has shown that complaints about businesses that demand upfront fees for loans they never arrange have risen yet again, according to the Office of Fair Trading (OFT).
There were 3,167 complaints made to advice service Consumer Direct in the 12 months to the end of June, compared with 2,059 the previous year.
The OFT, independent advisors and this blog have all warned consumers not to pay a fee before receiving a loan. This is not standard practice and is a strong, although not conclusive, sign that you are being ensnared in a scam.
In June the OFT said that it was planning to strengthen regulations to safeguard borrowers. At that time it was estimated that 270,000 people had paid upfront fees to credit brokers in the previous year.
Many of the complaints involved credit applications during which potential borrowers were told to send an upfront fee through a money transfer service. A more suspicious demand is difficult to imagine so consumers are advised to be aware of this tactic.
There has also been an increase in complaints about companies who are not interested in the applicant’s credit history, that ask for payment of fees upfront and then disappear with the money.
Consumers are advised 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.
Earlier this year, the OFT said it would close down rogue credit brokers, as well as propose changes to regulations that would give more opportunity to have fees refunded if loans were not made.
It also said it would ask the government to consider changing the law to ban outright the practice of credit brokers demanding upfront fees in exchange for arranging loans.
The OFT runs a register which shows whether a company has a valid licence to offer credit.
The problem with this type of scam is that the victims are often so desperate for money that it blinds them to the screamingly obvious flashing neon signs that read ‘scam’ in ten foot high letters.
In such a situation advice to take calm, rational decisions that take all the relevant factors into account is usually useless. However, if you or anyone you know are considering taking out a loan then that is exactly what you should do. If in doubt, consult a debt charity for assistance.
This entry was posted on Tuesday, August 23rd, 2011 at 5:31 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.