Safe or scam? Unregulated Loan Scams
Refundee is seeing a number of victims being tricked by unregulated loan scams. This is where you, as an individual, provide money for a loan for companies in need. They take your investment for what they call ‘bridging loans’ and offer them to developers, construction companies or even offering others’ personal loans with high interest. Your returns will be taken from the interest of these loans and the investment will mature after a period of time. If a company is suggesting that they are offering this service as an investment, they must be FCA regulated. You can check if a company is regulated by looking at the FCA register. The scammers commonly suggest that they are in the process of obtaining their FCA regulation - it is important to wait until the company is on this list before investing with them.
A bridging loan is usually required when a person or company requires a short-term loan until they are able to secure long term financing. Usually, this is for building and construction companies and this is most commonly what we see. If you are investing through a company who are offering bridging loans to construction companies, they may suggest that your loan will be secured against a property. The scammers suggest this to make the investment seem more genuine and offer security for your investment. However, we rarely see that the scammers actually own the property or development land that these investments are secured against. If you are being told that your loan (investment) will be secured against a property, you can do a land registry search to check if the property is owned by who they say it is (there is usually a small fee involved in this).
Presently, with the advancement of technology and AI, documents and promotional materials that they may provide are incredibly convincing. It is therefore more important than ever to do your due diligence before investing. You can use the checklist in this blog to help you.
We would always recommend making payments for investments on credit cards or making a bank transfer to another UK bank account. Make sure the bank you are sending the money from is signed up to the CRM code before sending the money, for the best payment protections. You can call your bank to ask if they have signed up to this voluntary code.
These types of scams are very sophisticated and commonly the scammers allow returns to be paid to you in the beginning, to make it look like the investment is going well. They may also use this as a way to get you to recommend friends and family to the investment, or even suggest that you will receive a referral bonus or increased returns for doing so.
Usually with these scams, it is a number of years after the initial investment that you realise that it is not genuine. This is usually because the returns stop or that you are beginning to have to chase the returns from your investment. Sometimes you will be told that the company has gone into liquidation or simply, the individual you were in touch with is no longer contactable.
So, how do you check if it is SAFE or a SCAM?
Here is a summary of the red flags to look out for if you are investing in bridging loans:
🚩You are contacted out of the blue about an investment opportunity
🚩They are asking you to make your payment to a personal account
🚩They are asking you to invest in a non-cryptocurrency investment, but ask you to pay in cryptocurrency
🚩They are not FCA regulated but offering loans or giving you financial advice
🚩The returns are high, seem too good to be true or they are guaranteeing success
🚩They are trying to persuade or manipulate you into making more payments
🚩Documents they send have spelling mistakes or aren’t complete
🚩They initially contact you multiple times a day and attempt to create a personal relationship
Checks you can do if you are unsure if what you are buying is genuine:
Check the company on Companies House - does the business description match what they do?
Check TrustPilot for reviews
Check the FCA register does the individual or their company have an FCA registration
Check the FCA warning list
Have other people look over any contracts or documents before signing or sending money
If your loans are secured against property, carry out a land registry check
Do a google search of the company and individual and the word ‘scam’
If the individual sends a photo of themselves, you can reverse image search
If you are ever unsure whether or not you are making a genuine investment, call the number on the back of your bank card and speak to your bank’s fraud team.
If you have lost money to this type of scam, Refundee can help you get your money back from your bank and you can fill in our fraud refund claim form for a free consultation. Our fee is 15% plus VAT on anything that we get back, and we don't charge anything if we are not successful. For larger cases, the fee is subject to a maximum of £10k plus VAT per case.
Remember, you don’t need to use a company like Refundee - you could work your case yourself for free! If you’d like to get a refund yourself. You can do this by following the ‘Claim Yourself’ guide here: https://www.refundee.com/claim-yourself.
