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Published 28 September 2022

Friend or Foe: Could You Spot a Loan Shark?

As the cost of living rises, loan sharks are lurking online and in local communities ready to pounce on people that are under increasing financial strain. But how can you tell if someone is a loan shark?

Borrowing is on the rise and with it, the risk of more people turning to illegal lenders. Also known as loan sharks, these lenders often charge incredibly high interest rates and may use intimidation and violence to collect payments. To lend money legally, lenders also have to be authorised by the Financial Conduct Authority (FCA).

Loan sharks have always been a threat, but recent research from think tank the Centre of Social Justice (CSJ) estimates that the number of people in England borrowing from one could be as high as 1.08 million, with almost half of those doing so to cover everyday expenses. And with more people set to struggle as winter approaches, the number of people pushed into the arms of illegal lenders could be on the rise.

Loan sharks are very good at masking themselves as friendly lenders so If you’re struggling and feeling desperate, you too could be caught out. And with more and more of these lenders hiding in plain sight, it’s important to be on the lookout and to keep on your toes.

Hiding in plain sight

Loan sharks often appear friendly and trustworthy at first, offering small loans under the pretence of “helping out a friend”. However, once they have lured someone in, they will typically become more threatening and aggressive over time, and demand more and more money.

Almost two thirds (64%) of loan shark victims in England were introduced to the lender by friends or family, and over half (56%) had considered the loan shark a friend before borrowing from them, according to the CSJ.

Predatory lenders can come in all shapes and sizes, which can make it difficult to identify them. Some operate as individuals, while others may pretend to be part of a larger, legitimate company.

However, there are a few warning signs that could indicate that you are being targeted by a loan shark.: Perhaps they’ll make the first move in offering to lend you money and won’t provide any paperwork stating the terms of the loan. Or they may ask for collateral, such as jewellery, your passport, or your bank card. They may also use threats and coercion, including visiting your house or harassing you online. Dealing in cash could be another red flag that someone is a loan shark.

Online threat

And it’s not just loan sharks that you meet in person that you need to be wary of. One in 10 people in England meet their illegal lender through social media in 2021, with young people particularly at risk, according to the England Illegal Money Lending Team (IMLT), a government body that investigates illegal money lenders. So – it is no surprise that many loan sharks are now conducting their illegal activities online, and community Facebook groups, WhatsApp, Snapchat and dating sites are just some of the places where a loan shark could be on the hunt for potential victims.

“Cyber loan sharks are becoming more prevalent, luring their prey in through social media and other online platforms,” says Cath Williams, LIAISE manager for the England IMLT.

“These online loan sharks use misleading ads, false promises of easy money, and harassment to trap unsuspecting victims in debt, using fear to suck them in and exploit their vulnerabilities.”

But Williams offers three tips that can help avoid the dangers of online loan sharks.

First, you should never send personal information to anyone you don’t trust. Loan sharks may ask for your address, copies of your passport and other personal documents, but you should always think twice before giving out any information. Second, you should be wary of adverts offering loans without credit checks. All authorised lenders have to carry out credit and affordability checks before offering any loans, so anyone offering “no credit check loans” is likely to be operating illegally. And third, always check whether a lender is l authorised by the FCA to lend money by searching for them on the Financial Services register.

If you think you’ve borrowed from an illegal lender, rest assured that you haven’t broken the law. Even though it’s illegal to be a loan shark, it is not a crime to borrow from them.

If you suspect that someone is a loan shark, you should report them to the relevant organisation as soon as possible. You can do this anonymously if you prefer. For further details of whom to contact nationwide, visit

About the Author

Rhiannon Philps

Rhiannon has been writing about personal finance for over three years, specialising in energy, motoring, credit cards and lending. After graduating from the University of Cambridge with a degree in…

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