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The Christmas season is a time of joy and celebration, but it can also be a time of financial strain. With the pressure to spend on gifts, travel, and festive gatherings, many individuals and families find themselves taking loans to cover the costs. This increased demand for loans unfortunately makes them more susceptible to a particularly insidious scam known as loan fee fraud.

What is Loan Fee Fraud?

Loan fee fraud occurs when individuals are promised a loan but are instead required to pay an upfront fee to secure it. Once the fee is paid, the scammer disappears, leaving the victim without the loan they need and out of pocket.

Why is Loan Fee Fraud on the Rise during Christmas?

The festive season creates an ideal environment for loan fee fraudsters to operate. The desire to cover Christmas expenses can lead individuals to make impulsive decisions, making them more likely to fall for scam tactics. Additionally, the increased use of online shopping and communication can make it easier for scammers to impersonate legitimate lenders.

How to Protect Yourself from Loan Fee Fraud

To safeguard yourself from loan fee fraud, follow these simple steps:

  1. Beware of Cold Calls and Emails: Reputable lenders rarely contact potential borrowers without their prior consent. If you receive a cold call or email offering a loan, it’s highly likely to be a scam.
  2. Avoid Upfront Fees: Legitimate lenders typically do not require upfront fees. If you’re asked to pay a fee before receiving the loan, it’s a red flag.
  3. Resist Pressure to Act Quickly: Scammers often create a sense of urgency to pressure you into deciding before you have time to assess the situation. Don’t rush into anything. Take your time to research the lender and the loan terms.

Additional Tips for Safe Borrowing

  1. Only borrow from regulated lenders: Use the Financial Services Register ( to verify the legitimacy of a lender before applying for a loan.
  2. Read the terms and conditions carefully: Before signing on the dotted line, thoroughly review the loan agreement, paying particular attention to any fees or hidden charges.
  3. Don’t provide personal information over the phone or email: Never share sensitive information like your bank account, personal and private details or national insurance numbers unless you’re certain you’re dealing with a legitimate lender.
  4. If you think you’ve been a victim of loan fee fraud: Report the incident to the FCA and your bank, and if you have lost funds due to this type of fraud, you can report it to Police Scotland by contacting 101.

By following these guidelines, you can significantly reduce your risk of falling prey to loan fee fraud. Remember, if something seems too good to be true, it probably is. Think carefully before making any financial decisions, and never hesitate to seek additional information or clarification from a reputable source.