Scam warning as officials stop thousands of financial promotions exploiting cost of living crisis

Unregulated firms offering promotions such as Buy Now Pay Later and high interest loans are taking advantage of the cost of living crisis, and are using fake claims to sell their high-risk products.

Britons can be targeted on social media, while browsing the web, or be sent scam emails, texts and phone calls.

Between July and September alone, the Financial Conduct Authority intervened to amend or withdraw 4,151 financial promotions, the highest since it started publishing the data.

The financial regulatory body said retail lending, investments and banking were the sectors with the highest rate of changes or withdrawal of adverts, accounting for 95% of its work with authorised firms.

Meanwhile, it also found a number of unauthorised firms operating. During the same three month period, the FCA issued 303 warnings about unauthorised businesses and individuals, with more than 20% being about clone scams.

Unauthorised firms operating including one that was offering pre-paid funeral plans, and another that was giving trading tips to more than 70,000 social media followers.

In its report, the FCA said: “As consumers become financially squeezed, they are likely to be targeted by fraudsters and scams and also more likely to engage with high-risk and unregulated products such as cryptoassets. We are aware that scammers are targeting consumers searching for investments online, in particular through search engines such as Google and social media such as Facebook, Instagram or YouTube.”

In another example, the FCA found 66 Buy Now Pay Later promotions from one company across various social media channels needed to be changed or taken down. They did not give fair or prominent risk warnings and were misleading about fees, the FCA said.

The FCA also had to write to members of the public it found on a mailing list used by scammers to carry out 'loan fee' or 'advanced fee' fraud.

Mark Steward, executive director of enforcement and market oversight at the FCA said: "As consumers feel the financial squeeze, they could be tempted by high risk, unregulated products and services or they could become a target for scammers preying on moments of vulnerability. "As a result, we’re doing even more to tackle false claims in adverts, issue prompt warnings to consumers, and we continue to engage with the largest tech and social media platforms as they also play an important part in protecting consumers from online harm.

"This is why changes to the Online Safety Bill to cover paid-for financial services advertising online are very much needed right now."

What is 'loan fee' or 'advanced fee' fraud?

This is where fraudsters ask victims to pay an upfront fee for loans or goods that never materialise. The fees can be small, perhaps £25, but can also range into hundreds of pounds.

How to spot a loan fee fraud

Loan fee fraudsters prey on people who need to borrow money. Victims may have applied for a loan with an authorised or fraudulent company when scammers contact them by text, email or phone to offer a loan. This contact is usually out of the blue.

Scammers will ask for an upfront payment into a bank account, or to transfer money via an unusual method, claiming it is a refundable deposit, administrative fee, insurance, or because of bad credit history. They may also demand the money quickly. But despite money being sent over, the loan is never received. Fraudsters may even ask for more payments.

How to protect yourself against loan scams

The Financial Conduct Authority has a wealth of tools and advice to stop Britons becoming victims of frauds.

Check the Financial Services Register to see if the business is regulated by the FCA.

Check the details they are giving you match what is on the register.

Only contact them through the details on the Financial Services Register - do not speak to them via a direct line or email they give.

If there are no contact details on the register or they say they are out of date, end contact and call the FCA on 0800 111 6768.

You can report a suspected scam to the FCA here.

And there is another scam warning related to the £650 cost of living payments you can read about here.