Loan scams are usually very elaborate and can be devastating for those affected. We reveal how this scam works and what to watch out for.
Why fake loan scams are hard to spot
Many loveMONEY readers have been targeted with HMRC tax evasion scams or clone investment firms, but there’s a rarely mentioned, elaborate scam that can be just as devastating – fake loan scams.
These scams can be tricky to unravel as the victim may actually have money transferred into their account so it can appear legitimate, especially as fraudsters pose as bank staff.
In other variations on this scam, fraudsters sometimes imitate legitimate loan companies to trick people out of their money, while another scam involves an upfront fee to cover ‘insurance’ for a loan.
In this guide, I’ll focus specifically on fake loan scams and reveal how they work, red flags and how you can avoid falling for it.
How does a fake loan scam work?
A loan scam involves the victim being contacted by scammers who claim they have taken out a loan with a bank that needs repaying.
In one case I investigated, the scammers applied for a loan in the victim’s name, which was sent to the victim’s linked bank account.
The fraudsters then posed as the individual’s bank and asked them to send the loan…