Families are being warned about a new scam that signs them up to Universal Credit without their knowledge – and then leaves them penniless.
Police say Trading Standards officers have been made aware of the scam, which is said to be operating across the UK.
What is the scam?
People are being contacted by fraudsters claiming to offer low-cost Government loans. But the victim’s personal details are used to apply for Universal Credit and then request a substantial advance payment from the Department for Work and Pensions reports Birmingham Live.
The scammers take a cut of this advance payment for themselves – the victim’s current benefits are then stopped and replaced by Universal Credit. They are required to pay back the loan in full from future Universal Credit payments.
A pregnant mother-of-three from Buxton, Derbyshire, is among those who has been duped.
The woman applied online for an emergency loan so she could replace her broken cooker.
She was told a loan for £1,500 was approved and received the cash in her bank account, minus a £400 upfront admin fee the firm had taken for themselves.
But then all the young mum’s usual benefit payments never appeared in her bank account.
She was baffled and rang the DWP, discovering that the loan company had actually used her details to apply for Universal Credit and get a £1,500 advance payment of the new benefit – from which they had taken the hefty fee.
As she had been signed up to Universal Credit, the DWP then halted all the claimant’s existing benefits of income support, housing benefit, child benefit and child tax credits.
And because she had been given the advance loan, she couldn’t get an immediate Universal Credit payment to live on. She must now pay back the loan from future UC payments.
The victim says she has lost around £1,000 a month
The 26-year-old said the bogus Universal Credit application had been approved by the Department for Work and Pensions (DWP), even though she never met anyone in person.
“Surely they should have asked me to go down for a face-to-face [meeting] or something before they verified that account,” she told the BBC.
“I’ve had to miss meals just to feed the kids. It’s depressing.”
Work and pensions minister Justin Tomlinson said he would investigate.
He said he was treating the case “as a matter of urgency”.