According to the Citizens Advice Bureau (CAB), customers should be wary of companies who charge an upfront fee for arranging a personal loan.
Despite The Office of Fair Trading launched "Scams Awareness Month" in February this year, which it used to draw people's attention to dishonest practises in the loans industry, there has still been an increase in the number of people caught out.
Customers are drawn in by low rate loans then asked to pay an "arrangement" fee for a loan that never materialises.
CAB has warned that even when clients receive a loan from these dishonest companies, it is frequently at a higher interest rate than advertised or it is less than the amount that they applied for in the first place.
A loan customer's statutory rights enabled them to claim back the upfront fee, even if one was found for them and they turned it down.
"Even if the company offers you the loan and you decide not to take it, or if you receive a loan and they give you less money than you asked for, you are entitled the money back," a CAB spokesperson said.
"If you do not receive your money back, this is a breach of your rights and you would be entitled to pursue the company and take them to court."To read more about loans, click here.
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