The Office of Fair Trading (OFT) is warning people to steer clear of scam loan companies who take upfront fees but fail to provide credit or offer clearly unsuitable credit alternatives.

The credit regulator is alerting consumers after seeing a 50% year-on-year rise in complaints about loan scams, particularly credit applications which involve the consumer ‘wiring’ or sending upfront fees through money transfer companies.

Complaints to OFT-managed advice service Consumer Direct increased from 2,059 between 1 July 2009 and 30 June 2010 to 3,167 during the same period in 2010-11.

The OFT advises people to be vigilant when dealing with or taking calls from loan companies that want upfront fees and who are not interested in consumers’ credit history.

David Fisher, OFT director of the Consumer Credit Group, said: “We have seen an increase in complaints about companies who are not interested in the applicant’s credit history