The Financial Conduct Authority (FCA) has launched a new campaign to help consumers spot and avoid loan fee fraud.

According to research published by the regulator, over half of UK adults (55%) are more worried about their finances this summer than they were last year.

The FCA’s latest consumer research was conducted by Opinium among a nationally representative sample of 2,000 UK adults in July, and found that a quarter of respondents (24%) have turned to credit or loans to fund additional summer related spending. In turn, the regulator believes that consumers may be more susceptible to being targeted by loan fee fraudsters as a result.

Loan fee fraud, where a consumer pays a fee for a loan they never receive, typically results in a £260 loss and the FCA’s data suggests this type of fraud usually peaks in the summer months and is growing year-on-year.

The regulator’s figures have shown that last summer, there was a 26% increase in complaints from consumers who had fallen victim to loan fee fraud compared to 2021. This year, the rising cost of living coupled with summer spending pressures could increase the risk of loan fee fraud, the FCA warned.

If consumers need to apply for a loan, the FCA is urging them to check the information on its website. This includes checking the FCA register to find out if the firm they are applying to for a loan is authorised – and if the firm is not authorised, it is likely to be a scam.

“For many, summer brings with it the chance to relax and unwind but it also brings with it financial pressures – from holidays and festivals to funding days out, or out of term childcare for parents,” said executive director of enforcement and market oversight, Steve Smart.

“With inflation, energy costs, and rising mortgage bills, this summer spending will come at a time of enhanced vulnerability for many.

“For fraudsters, this provides the perfect opportunity to take advantage of people considering how to make ends meet over the summer months.

“If you need to apply for a loan, check the register to see if the firm is legitimate. Don’t get burned by scams on your summer holidays.”

Reacting to the FCA’s data, fraud SME at Feedzai, Dan Holmes, added: “The FCA’s research highlights just how important fraud detection and mitigation is in safeguarding consumer’s money –particularly as living costs continue to rise. Behavioural biometrics, device analysis and advanced AI and machine learning capabilities that can stop fraud early, causing minimal disruption to people, will play an increasingly important role.

“While financial institutions need to take a robust approach to tackling fraud, education around fraud prevention is equally as important. As fraudsters adapt and use increasingly sophisticated techniques to scam consumers, a combination of the latest anti-fraud technology and consumer education is needed to give us the best possible chance of stopping fraud in its tracks.”

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