According to new data from Lloyds Bank, the number of advance fee scams is rising sharply.
Reports of scams involving the payment of a fraudulent upfront fee for products or services rose by more than 80% last year.
Victims lost an average of £711 to the scam, with fraudsters increasingly turning to this method as they take advantage of the cost of living crisis and financial struggles for the victims.
For this scam, the victim is asked to pay upfront for goods and services that never materialise.
Tactics can include fake advertisements for loans, jobs and rental properties.
Lloyds say that reports of loan fee scams more than doubled in the past year, rising by 105%. Victims of loan fee scams lose an average of £214.
The fake ads for these scams will typically offer a fast loan decision from a fictitious lender. However, they can sometimes involve the impersonation of an established financial institution.
Victims are told their loan application has been approved, regardless of their credit history. However, before they receive the loan, they are asked to pay an upfront fee to secure the money.
Fraudsters may even ask for further upfront payments, but the loan is never received.
Liz Ziegler, fraud prevention director at Lloyds Bank, said:
“Fraudsters will ruthlessly adapt to any changes in consumer behaviour and, with the increased cost of living putting more pressure on people’s finances, the recent surge in advance fee scams targeting those on low incomes or with a poor credit history is alarming.
“The important thing to remember is that a genuine lender will always conduct thorough credit checks prior to agreeing a loan and won’t ask for an upfront payment before releasing the funds. If you’re concerned in any way about your finances there are lots of reputable organisations that can help, and it always makes sense to speak to your bank first.”
The highest number of advance fee scams last year were reported in London, with the West Midlands also experiencing many cases.
People living in deprived areas were twice as likely to fall victim to advance fee scams, with the poorest parts of the country seeing more than 70% of total cases.
“The abundance of these fake online ads reinforces the importance of the government’s Online Safety Bill to ensure social media sites and search engines stamp out fraudsters operating on their platforms,” Ziegler added.