Before applying for a payday loan or any other form of credit, check that the lender or broker is genuine, authorised for the service being offered and using contact details that match the official record. A professional-looking website by itself is not proof that a firm is legitimate.
Use the FCA Firm Checker
Search for the business using the FCA Firm Checker or Financial Services Register. Confirm that the firm is authorised and has permission for the relevant lending or credit-broking activity. A company name or FCA reference number on a website is not enough because fraudsters can copy the details of a genuine firm.
Compare the website, telephone number, email address and trading names with the information recorded by the FCA. If they do not match, stop and contact the genuine firm through the official details shown on the FCA website.
Watch for clone firms
A clone firm pretends to be an authorised business by copying its name, address, logo or registration details. Warning signs include unexpected contact, a recently created or slightly misspelt web address, pressure to act immediately, and contact information that differs from the FCA record.
Be cautious about upfront fees
An unexpected request for money before a loan is provided can be a sign of loan-fee fraud, particularly if payment is demanded quickly or through an unusual method. However, it is not correct to say that every genuine firm is legally prohibited from charging an upfront fee.
The FCA explains that an authorised firm which genuinely charges a fee before providing a loan must send a notice containing specified information. The customer must confirm that they understand and agree to the notice before the loan is provided. Verify the firm independently before paying anything. Badger Loans does not charge customers for applying.
Check the website carefully
- Look for HTTPS and a valid security certificate, but remember that scam websites can also use HTTPS.
- Check that privacy, complaints and company information are present and internally consistent.
- Confirm the registered company details independently through Companies House where appropriate.
- Be wary of spelling changes, copied text, broken pages or contact details that cannot be verified.
- Do not provide online-banking passwords, card PINs or one-time security codes.
Check the loan information
The firm should explain the amount borrowed, repayment schedule, interest, applicable charges and total amount repayable. Read the pre-contract information and agreement carefully. Do not proceed if the figures change unexpectedly or the firm will not answer reasonable questions.
What to do if you suspect a scam
Stop communicating with the suspected fraudster and do not send more money or personal information. Contact your bank immediately if you have made a payment or disclosed banking details. Report the matter to the FCA and Report Fraud, and retain copies of emails, messages, web addresses and payment information.
You can read more about spotting a scam loan website and review the Payday Loans information published by Badger Loans.
Related reading: See the background to UK payday-loan regulations.
