THE finance regulatory body has warned a large number of Scots are at greater risk of loan fee fraud this Christmas as their study found increasing numbers are willing to take on more debt to maintain festive spending.
Consumer research by the Financial Conduct Authority are concerned that cases of loan fee fraud - where a consumer pays a fee for a loan that they never received - has risen by fifth on last year.
An often-used tactic by loan fee fraudsters is to pressurise people who are seeking quick access to cash – but those falling victim stand to lose £260 on average.
Ths latest research highlights a heightened risk to vulnerable consumers of being pressured into falling for the scam at Christmas.
The research reveals the impact of pressure tactics loan scammers employ, as 64% of consumers feel time pressure leads to poorer and riskier choices.
Their study carried out in November found 38% of Scots feel under pressure to maintain spending at Christmas this year – of which, one fifth expect to take on more debt specifically to fund Christmas spending.
It found Scots plan to spend more than the average British consumer this year on Christmas presents with the average being £468 - £24 more than the rest of the UK.
Making decisions under time pressure is all too familiar to last-minute Christmas shoppers - as are the consequences.
And the study found that 46% of Scots have bought a Christmas present they regret – higher than the UK average (41%).
The FCA is asking people to check its register if they are asked to provide an upfront payment for a loan.
But nearly two in three have never heard of loan fee fraud, and just 18% could spot its warning signs – lower than the UK average of 22%.
Mark Steward, executive director of enforcement and market oversight, FCA, said: “This Christmas period is going to be tough for many consumers, and those who have been hardest hit by the rising cost of living will understandably be anxious about meeting the additional expenses that Christmas brings.
“Some consumers may be tempted to take out loans to meet these extra costs. Unfortunately, this is where loan fee fraud scammers and illegal lenders see an opportunity.
“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. And 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.”
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