Trading Standards Service warns consumers to watch out for online loan scams

23 July 2015

The warning comes during this year’s "Don't be Rushed, Don't be Hushed" Scams Awareness Month campaign. 

TSS is alerting consumers after seeing a year-on-year rise in complaints about loan scams, particularly credit applications which involve the consumer 'wiring' or sending upfront fees through money transfer companies.

Laura Kane, Trading Standards Inspector, explained: “A person will typically reply to an advert online or a social media site for a fast loan and will have their application approved regardless of their credit history. Before they receive the loan, they are told they must pay an upfront fee to cover administration or insurance costs for the loan. Once this fee is paid, the victim does not usually hear from the company again and the loan is never received.”

“In one case, a consumer from Armagh lost around 1,000 to this scam when applying for a loan on a fake website. The scammers promised her a loan of 3,000 but demanded that she make advance payments via money transfer voucher and by credit card to cover fees and to show that she could make repayments. She believed that the scammer’s reasoning for making advance payments was plausible but ended up losing a lot of money for a loan that never existed.”

TSS is also seeing an increase in another loan scam involving online credit broker websites. These are websites that promise to find loans for people with poor credit histories, but are not lenders themselves. Often buried in the small print is a clause allowing the broker to charge 50 to 75 to find the person a loan, on top of an annual interest charge as high as 3,000%. In the worst cases, the site shares the person’s bank details with as many as 10 other companies, which then also debit the same sum from their account. 

TSS has received a large number of complaints from consumers who have had hundreds of pounds debited from their account by companies they have never dealt with. Despite paying the fees, the majority of consumers did not receive a suitable loan or were simply directed to a payday loan site. 

Trading Standards Inspector Laura Kane added: “Demands for payments upfront should serve as a warning sign as genuine loan companies would never ask for payments to be made in advance. The object of applying for a loan is to receive money and pay it back over time in affordable instalments. Scammers prey on anyone they think may be an easy target, such as those in need of money quickly, who have bad credit or have been turned down for loans before.”

The Trading Standards Service advises people to be vigilant when dealing with or taking calls from loan companies that want upfront fees and who are not interested in consumers' credit history.
TSS’s list of 'dos and don'ts' to help consumer’s spot scam loan companies are:


· Do be very careful when dealing with loan companies that charge upfront fees.
· Do be cautious if a loan company cold-calls you.
· Do some research about the business offering the loan - look for proper phone numbers and physical addresses and ask for information in writing.
· Do check that the company has a credit licence on the Consumer Credit Register at:


· Don't believe adverts which indicate a loan is ‘guaranteed’.
· Don't give out your card details 'for security reasons' as the company may then debit your bank account without you knowing.
· Don't wire money to loan companies using money transfer services when applying for loans.
· Don't go ahead with a loan if a company approves it and then demands a fee before you get the money.

Scams Awareness Month runs throughout July and this year’s campaign “Don’t be Rushed, Don’t be Hushed” aims to highlight how scams continue to flourish when people stay silent. If you are the victim of a scam or have information about a suspected scam, tell family and friends and contact Consumerline by phone on 0300 123 62 62, online at or alternatively contact us via our Facebook page at ‘Northern Ireland Trading Standards Service’. Consumerline is the Department of Enterprise, Trade and Investment’s consumer advice helpline.

The national campaign is being supported locally by the Department of Enterprise, Trade and Investment’s Trading Standards Service. The campaign is asking people to keep two things in mind whenever they receive an unsolicited approach or when looking for goods or services: don’t be rushed and don’t be hushed. People should take their time making a decision and be sure of their facts before parting with money or personal information, and speak out when they think they’ve spotted a scam. 

The top five types of online scam reported to Consumerline by Northern Ireland residents are: 

1. 'Subscription traps': Consumers are trapped into long-term costly contracts by 'free' trials or trial offers with health, nutrition and beauty-related products the most common. The majority of complaints are about continuous payments being taken without the consumer's permission.
2. Counterfeit goods: These are goods sold on online auctions and social networking sites which consumers believe they are buying from the official brand holder's site, when in fact they are dealing with a copy site based in the Far East.
3. Online credit brokers: This accounted for the one of the most frequent bogus selling cases reported with a national rise of 228% over the past year. Complaints included unexpected fees and fees taken for loans which never materialised. 
4. Copycat websites: These sites offer services from Government departments and contain features similar to those of the official site making them appear official. The majority charge a premium for services that are often provided free or much cheaper by the Government. Examples are passports, birth and death certificates, driving licences, driving tests, fishing licences and European Health Insurance Cards. Many of these companies use website tools to achieve high positions in search engines often ranking them higher than official sites.
5. Lottery or prize draw fraud: Consumers are informed by email that they have won a large amount of money in an online lottery. Spanish, Canadian and Australian lotteries are among the most common. 'Winners' are asked to respond quickly to claim their prize, which is where the risk of discussing bank account details arises. Either the lottery doesn't exist or fraudsters are misusing a genuine name  and there is no prize money to win.

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