-
Share
Be Wary of Christmas Loan Scams, the FCA Warns
As Christmas spending escalates, the FCA warns of the escalating risk of loan fee fraud.
According to the UK’s financial regulator, the Financial Conduct Authority (FCA), nearly two-thirds of parents feel pressure to overspend during Christmas.
That being said, 40% of UK adults expressed concerns about affording Christmas, a number which rises to 52% for parents with children under 18, according to a study commissioned by the FCA with 2,000 UK adults.
Over a quarter (29%) of parents with young children have either borrowed, or intend to borrow money to cover the cost of Christmas. This exposes a greater number of people to be possible victims of loan fraud, where consumers pay fees for a loan they never receive.
The amount borrowed increased by over a third between last year and now, jumping from £305 to £412. Loan fee fraud typically results in £255 in losses on average, according to Debt Free Advice.
To address the rising threat, the FCA introduced a three-step checklist to help consumers safeguard their finances:
- If you are cold called or emailed, it could be a scam.
- If you’re asked to pay an upfront fee, it could be a scam.
- If you’re asked to pay quickly or unusually, it could be a scam.
“Fraudsters will take advantage even of parents’ desire to give their children a good Christmas. Don’t let them. Remember the 3-step check and protect yourself and your loved ones from loan fee fraud,” said Therese Chambers, executive director of enforcement and market oversight.
Recommended reading
- Broadband Bills Sending 2.5m People in UK Into Debt
- What Holiday Season Tactics Can We Expect From Cyber-criminals?
- NCSC Warns Consumers to Avoid Falling for Christmas Scams
“Many of our clients are already burdened by the weight of utility bill debt, imposed by the ongoing cost of living crisis. Holiday-induced debt can have far-reaching consequences, affecting families’ financial stability, mental health, and overall wellbeing,” commented Matt Dronfield, managing director of Debt Free Advice.
“If a consumer deals with an unauthorised firm, they will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.”
