Summer Spending Pressure Fuels Loan Fee Fraud Fears

The UK’s financial regulatory has warned consumers to be on the lookout for loan fee fraudsters after revealing new research claiming that many Brits are worried about their finances this summer.

The Financial Conduct Authority (FCA) said it polled 2000 adults in late July and found that 55% are more concerned about their bank balance this summer than last.

Rising food (63%) and energy costs (53%) were cited as the biggest concerns, but summer spending pressures including entertainment costs (24%) and summer holidays (22%) also loomed large for respondents.

More than a third (35%) said they’re worried about how they’re going to pay for summer holidays this year.

As a result, a quarter (24%) of British consumers are turning to credit or loans to fund their summer spending plans, the FCA said. This could open the door to loan fee fraud; a type of advanced fee fraud where individuals pay a fee to access a loan that never materializes.

Read more on advance fee fraud: Lloyds Bank Warns of 80% Surge in Advance Fee Scams

The FCA warned that such scams tend to peak in summer, costing victims an average of £260. It said there was a 26% year-on-year increase in complaints from victims last summer versus 2021.

“With inflation, energy costs, and rising mortgage bills, this summer spending will come at a time of enhanced vulnerability for many,” argued FCA executive director of enforcement and market oversight, Steve Smart. 

“For fraudsters, this provides the perfect opportunity to take advantage of people considering how to make ends meet over the summer months.”

The FCA urged consumers to be aware of the dangers of responding to unsolicited calls or emails, and of requests to pay an upfront fee in order to process a loan. Scammers will also typically hurry their victims so they don’t have time to think things through, the regulator added.