OFT warns borrowers of scam ~ Debt Managements and Consolidation

Wednesday 24th August 2011

The Office of Fair Trading (OFT) has released an official warning advising consumers of the dangers of scam loan companies.

For those in debt, it can be very tempting to accept what seems a quick and easy deal from a loan company, however the OFT is warning against accepting loans from companies who take upfront fees but do not provide credit or offer clearly unsuitable credit alternatives. The OFT has released the warning after a 50 per cent year-on-year rise in complaints regarding loan scams. Consumer Direct, an OFT-managed advice service, saw complaints increase from 2,059 between July 1 2009 and June 30 2010 to 3,167 during the same period in 2010-11. OFT Director of the Consumer Credit Group David Fisher said: “We have seen an increase in companies who are not interested in the applicant’s credit history, that ask for payment of fees upfront and then disappear with the money.“We advise people to check out the company carefully before agreeing to anything, including asking for a landline number, a physical address and doing a search about the company online, as well as checking that they have a valid credit licence.”The OFT also released a number of Dos and Don’ts for those needing to take out a loan. The Dos included being ‘very careful when dealing with loan companies that charge upfront fees’, being ‘cautious if a loan company cold-calls you’ and checking ‘that the company has a credit licence on the Consumer Credit Register’.The Don’ts, on the other hand, included not believing ‘adverts which indicate a loan is ‘guaranteed’’, not wiring ‘money to loan companies using money transfer services when applying for loans’ and not giving ‘out your card details ‘for security reasons’ as the company may then debit your bank account without you knowing’.David Fisher advised: “If consumers think that they have been approached or tricked by an advance-fee loan scam, they should report it to Consumer Direct.”For advice on loan scams or any other consumer issues call Consumer Direct on 08454040506 or visit www.direct.gov.uk/consumer. Free, confidential debt advice services are available for those facing financial difficulties through their local Citizens Advice bureau by visiting www.citizensadvice.co.uk/.
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