It follows reports that fraudsters have stolen tens of millions of pounds of taxpayers’ cash
Fraudsters are targeting people claiming government benefits with offers of free or low-cost loans, leaving them up to £1,500 out of pocket.
Action Fraud, the national fraud and cyber-crime reporting centre, says people who currently receive Universal Credit are being offered the loans on their doorstep, via telephone and over social media.
Victims are contacted by fraudsters, often posing as Department of Work and Pensions (DWP) staff, offering them a free or low-cost government loan or grant.
The DWP introduced advanced loans after people claiming Universal Credit were forced into debt and had to turn to food banks after having to wait for up to five weeks to receive their money.
The fraudster requests personal and financial information from the target and uses these details to apply for Universal Credit in the victim’s name, usually without informing the victim about it.
After the claim is approved by DWP the money is transferred to the victim’s account.
The fraudster then contacts the victim to transfer a significant portion of the money as a finder’s fee.
The DWP then contacts the victim about their Universal Credit application who has to repay the total amount initially borrowed.
Action Fraud says one victim was introduced to this scam by a friend on social media.
The friend helped them receive the free grant of over £1,000, only to later be asked to transfer £500 to the fraudster’s account as a finder’s fee.
The person only realised they had fallen victim to a scam after they received a letter from DWP requesting repayments for the loan.
A DWP spokesperson says: "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."
Fraudsters had stolen tens of millions of pounds of public money using the scam, according to a recent report from the BBC.
It revealed that job centres across the UK are being inundated with bogus claims, with up to 10% potentially fake.
Chairman of the Parliamentary Work and Pensions Committee, Frank Field, has written to the DWP secretary Peter Schofield, to find out the extent of the scam and what the department plans to do about it.
He wrote: "In the Department's fantastical predictions, Universal Credit was supposed to reduce error. Instead it is the most error-riddled of all benefits, and it’s only getting worse.
“DWP wasted billions of pounds of public money on error last year alone but that doesn’t begin to count the human cost. When will DWP get a grip on this escalating problem?”
Never share your personal or financial information with someone you don’t know and trust, especially if it’s in response to an offer of 'free money' or a 'free grant'.
The DWP will never approach you in the street or ask for your personal/financial details over social media.
If you have concerns about your benefits, you should visit www.gov.uk/contact-jobcentre-plus
If you suspect your identity may have been stolen, you can check your credit rating quickly and easily online.
You should do this every few months anyway, using a reputable service provider and following up on any unexpected or suspicious results.