How to spot a fraudster offering a benefits loan scam

man with clipboard

In the last few days, a BBC News investigation revealed the existence of a multimillion pound scam affecting Universal Credit claimants across the UK, where criminals have taken out advance loans online to withdraw money in the name of legitmate claimants under false pretences.

Here at CPCU, we want to keep your money safe whether you are a member or not, so we’ve come up with a guide to help you protect yourself and your personal information.

Firstly, remember that your benefits information should treated as just as sensitive as your banking details, and it should not be shared with anybody else.

You should not trust or talk to anybody that comes to your doorstep claiming to be from the DWP, Jobcentre, or representing Universal Credit, no matter what identification they provide or how they are dressed.

Jade Thomas, 31, from Manchester, told BBC News that the fraudster that preyed on her “had a badge from the Job Centre Plus… he was dressed smartly.”

In addition, you should exercise the same caution if you are phoned by anyone claiming to represent these agencies, and you should not give out your universal credit details or any other personal information.

This is the common form of the scam that is estimated to have generated £20 million of revenue for criminals. A man or woman will knock on the door of the victim, and tell them that they are from the Jobcentre, and want to offer them a government grant or loan.

Jade Thomas was told by the fraudster that she was eligible for a special grant, and says “all he needed was my provisional licence and my bank card, and a photo which he had to take there and then”.

Within two or three hours, her bank account had been credited with £1,525.  The fraudster then demanded £1,000 for setting up the payment, so she was only left with £525 of it.

What Jade didn’t know was that the fraudster had simply registered for Universal Credit using her name and personal information, and had taken out a loan advance.

This not only left her being asked to pay back the entire £1,525, but meant that she would no longer recieve per previous old-style benefits and had been permanently transferred over to Universal Credit.

It is also worth noting that fraudsters could also leave you on the hook for their crimes if they manage to access your personal details in any other way. You should never discard letters from the council or your bank without shredding or otherwise making them unreadable (for example, you can turn them into pulp by leaving them in a bowl of water!).

If you use a shared computer, or one in a public place, you should make sure that your financial details are not saved on the computer by the browser you are using. In most web browsers, you can activate ‘private’ or ‘incognito’ mode to ensure no details are saved.

Whether it is related to benefits or not, you should never accept financial advice from a stranger who knocks at your door, or financial services like a loan. What might feel like a lifeline could end up getting you in more trouble.

If you do need short term financial support, CPCU offers loans at a low cost, affordable rate for any of your needs. You might be surprised at how little you could end up paying compared to high street payday lenders!

Provider Interest Rate (APR) Repayments Total Interest Paid Total Cost of Loan
City of Plymouth Credit Union 26.82% £89.26 per month £35.58 £535.58
Provident 535.3% £30 per week £280 £780
Satsuma 856% £158 per month £448 £948
Sunny 1291% £165.53 per month £493.20 £993.23

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