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Loan fee fraud – FCA warns consumers about its rise and how to protect themselves

  • United Kingdom
  • Financial services disputes and investigations


What is Loan Fee Fraud?

Loan fee fraud is a type of advance fee scam, and arises where:

  • an individual or business wishes to take out a loan online;
  • an upfront fee for the loan is sought by the organisation arranging the loan (i.e. the scammer);
  • once the fee is paid, the loan amount is never received.

With the cost of living at an all-time high, the FCA has relaunched their campaign via various platforms including advertisements and social media to protect victims from this type of scam.

3 Step Check

The FCA recommends to consumers that a 3 step check should be undertaken as a measure of protection to avoid falling victim to loan fee fraud. Where any of these requests are made by loan providers, the FCA is warning that it may be a scam

  1. if you are asked to pay an upfront fee;
  2. if you are asked to pay quickly;
  3. if you are asked to pay in an unusual way, such as with vouchers/money transfer.

The FCA recommends that consumers should not borrow money from a provider which is not a FCA authorised provider. As well as checking FCA authorisation, the FCA has a Loan Fee Fraud page on its website to educate consumers1.

Separately, the police has recently given advice relating to advance fee scams more generally2.

Categories of people most at Risk

Individuals deemed to be the most vulnerable to falling victim to this scam include:

  • those in the 25 – 45 years of age group;
  • unemployed or those working in manual occupations.


  • loan fee payment requests may go unchallenged by consumers who do not satisfy loan eligibility criteria and/or have a poor credit history. This is because they may be unable to secure loans from mainstream lenders
  • vulnerable consumers are therefore an easy target for scammers looking to benefit from unsuspecting consumers, gaining their confidence with the promise of providing a loan which does not exist. The festive period in a few months’ time increases online fraud risks due to consumers’ increased spending habits. The recent pandemic has only exacerbated these trends as more consumers are now making purchases, and carrying out other activities, online
  • loan fee fraud is therefore a concerning trend. It is imperative that if consumers are approached by unauthorised lenders or are feeling pressured to pay upfront loan fees, a report to the FCA via its reporting form3 should be made.


  • fraud, and scammers’ tactics, continues to evolve. Loan fee fraud is a type of advance fee scam, where a party pays for goods or services which never arrive. The sums being lost are relatively small, but are high volume
  • the FCA campaign is useful because it shines a light on the key points which should be considered. The goal is that consumers, particularly vulnerable consumers and those struggling financially, are best protected
  • although the FCA’s campaign is primarily aimed at consumers, small and medium businesses should also be vigilant.


3. Report a scam to us | FCA