Christmas shoppers face a rising risk of loan fee scams this winter as fraudsters “pile on the pressure,” the Financial Conduct Authority (FCA) has warned.
Data compiled by the regulatory body said loan fee fraud cases are already up by a fifth compared to last year.
Consumers being under greater financial pressure is likely leaving vulnerable people open to fraudsters' tactics, with one in eight saying they will take out a loan to support their Christmas spending.
One commonly-used tactic by these fraudsters is to pressurise consumers seeking fast payment for a non-existent loan, the FCA said.
Pressure around Christmas is a common theme, especially when it comes to gift buying, with 87% of shoppers saying they undertake last-minute shopping and 41% adding they later regret the panic buy.
Around 64% of shoppers also acknowledge that time pressure leads to poor decision-making and riskier choices, something fraudsters use to their advantage.
“At a time of heightened stress and pressure, scammers and illegal lenders will rush consumers into bad-decision making. Be aware of red flags – such as being asked for a fee or being asked to pay in an unusual way,” said Mark Steward, director of enforcement and market oversight at the FCA.
Failing victim to scammers and fraudsters can “have a devasting impact on families’ budgets at Christmas.”
The average loan fee fraud costs consumers £260, more than half the total amount people expect to spend on presents alone this year.
To help consumers protect themselves, the FCA is launching its latest ScamSmart campaign, aiming to provide the tools to spot a potential scam.
“IF you are considering taking out a loan, please pause and check the FCA’s Register to make sure you are dealing with a legitimate lender. Don’t let scammers be the ones enjoying your Christmas this year,” said Steward.