Victims have reported being offered loans on their doorstep, on the phone, or via social media, Action Fraud has said. Some people who currently receive government benefits or who are eligible for Universal Credit have been targeted by the scam. The fraudsters are then leaving the victims up to £1,500 out of pocket, Moneywise report. Action Fraud has issued a warning, urging members of the public to be aware of ways to protect themselves from being targeted.
The national fraud and cyber-crime reporting centre said victims are being contacted by a fraudster, offering them a “free” or “low cost” Government loan or grant.
The scammers are then requesting personal and financial information from the target.
They’re using these details to apply for Universal Credit in the victim’s name, usually without informing them about this.
With the details having been used to apply for Universal Credit, the Department for Work and Pensions (DWP) then approves the eligible claim, transferring the money to the victims account, Action Fraud said.
They said that the fraudster then requests that the victim transfer them a significant portion of the money as a “finder’s fee”.
However, due to have unknowingly received a Universal Credit advance payment, victims have then received a letter from DWP regarding their Universal Credit application.
Due to the fraudster’s actions, they’ve then had to repay the total amount initially borrowed.
One victim has said that they were introduced to the scam by a so-called friend on social media.
After reaching the “free grant” of more than £1,000, they were later asked to transfer the £500 to fraudster’s account as a “finder’s fee”.
But it was only when they received a letter from the DWP requesting the repayments for the advance when they realised they had been scammed.
A DWP spokesperson told Moneywise: “We’re encouraging people to listen to their instincts. If someone offers you a low-cost loan from the government, they may be trying to steal your identity.
“Treat your personal information for benefits in the same way you would for your bank. And if you think you’ve been targeted, we urge you to report it urgently.”
Action Fraud advise never sharing personal or financial information with a person who they don’t know or trust – particularly if it’s in response to an offer of supposed “free money” or a “free grant”.
They also state that the DWP will never approach a person in the street or ask for one’s personal or financial details over social media.
Should a person have concerns about their benefits, an individual should visit www.gov.uk/contact-jobcentre-plus.
If one expects their identity has been stolen, it’s possible to check their credit rating quickly and easily online.
Action Fraud advise doing this every few months regardless by using a reputable service provider, in addition to following up on any unexpected or suspicious results.