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Last Updated: Saturday, 8 January, 2005, 14:47 GMT
OFT issues loan scam warning
Cash
The OFT and the Canadian authorities are

The Office of Fair Trading (OFT) is warning people to be vigilant after a Canadian loan scam arrived in the UK.

Some people have already been stung after responding to newspaper adverts offering fast loans regardless of credit history.

One woman has lost 4000, according to the OFT.

The scam works by requesting an upfront fee before the loan is approved, but once that is paid, the consumer never hears from the company again.

Linzi Talbot, Head of International Enforcement and Liason at the OFT, said the scam has been specifically targeting vulnerable people with credit problems.

She told BBC Radio 4's Money Box that the people behind the scam are advertising in local or free press, and continued:

"Generally, the adverts contain wording such as: 'Good or bad credit history? We can help. Call today for fast approval'.

The advert, usually placed in the classified section of the newspaper, gives an 0800 free phone number.

When the applicant calls, they are approved for the loan on condition they pay an "insurance fee", normally about 10% of the loan amount.

Money wire

To pay the fee they have to wire the money via Western Union or Money Gram.

But once this advance fee is paid the consumer never hears from the company again and the loan is never received.

Be wary of sending any money overseas that requires insurance for a loan upfront
Linzi Talbot, OFT
It is not apparent from the adverts that the scam originates from Canada, but that is where people are being asked to wire the money to.

Unfortunately, Linzi Talbot said there is not much hope of anyone seeing their money again:

"From the experience of the victims in the US, it is very unlikely that the money will actually be returned," she said.

Explaining the OFT advice she continued: "People should normally seek credit from companies that they know.

"But the key thing here is that they should be wary of sending any money overseas that requires them to pay insurance for a loan upfront."

The OFT is working closely with the Canadian authorities to take action against the fraudsters and is urging consumers who have been affected to report it to them by calling 08457 22 44 99.

BBC Radio 4's Money Box was broadcast on Saturday, 8 January, 2005 at 1204 GMT.

The programme was repeated on Sunday, 9 January, 2005 at 2102 GMT.



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