The Office of Fair Trading is warning people to steer clear of scam loan companies who take upfront fees but fail to provide loans. It says it has seen a 50 per cent increase in complaints from members of the public.
Many of the victims made applications for credit and were asked to "wire" or send upfront fees through money transfer companies. The OFT advises loan applicants to be very careful of lenders or credit brokers who cold call and ask for money before providing a loan.
Complaints about the practice surged to 3,167 in the year to June, a rise from 2,059 in the previous year.