Scammers and loan sharks target debt-ridden migrants in UK

• Migrants arrive in UK already saddled with debt
• Scammers exploit desperation amid migration crackdown
• Financial exclusion drives migrants to loan sharks

LONDON - Scammers and loan sharks are preying on migrants in Britain, exploiting their desperation to stay in the country as the government clamps down on migration, money experts say.

Newly arrived asylum seekers, refugees and temporary workers, who are often unfamiliar with Britain's banking and migration systems, have been targeted with offers of fraudulent debt solutions, private loans and visa help.

By the time they reach Britain, many have already accrued debt through visa or overseas recruitment fees, said Joshua Aspden, who works in refugee resettlement at Charnwood Borough Council in northern England. This leaves them in a vulnerable position, often exacerbated by financial exclusion, a distrust of authorities and language barriers.

"They might not be fully literate or literate at all in their own language. Some of the people I worked with who got scammed ... didn't know how to read or write," said Aspden, an expert in personal finance issues for migrants.

"Because ... the debt is overwhelming, they want a quick fix."

Aspden, who has run finance workshops for migrants, said some migrants spend hundreds of pounds on debt management products purchased at offices on the high street, only to discover they were phoney storefronts.

Others have paid thousands of pounds for bogus immigration advice, he said.

"It might be one of these pop-up offices that somebody's rented for a week. And people have gone back, and the office is not there," he told Context.

Financial exclusion

Kate McQueen, community programmes manager at The Money Charity, also runs personal finance workshops for migrants. She said many find it difficult to navigate banking systems.

"Some people are coming from countries where there may be issues with people's trust with the banks. Some countries have more informal financial systems," she said.

Around 1.6% of the British population, or 900,000 people, did not have a bank account in 2024, according to the Financial Conduct Authority, which regulates financial services firms.

Of those who did not have an account, a quarter said they did not want to share financial information with banks.

Charities say without an accepted proof of address, identification and credit history, it is difficult for people without secure legal status, including asylum seekers and temporary workers, to open bank accounts or borrow money from regulated providers.

"Once you're already in debt, it's very common ... to panic and borrow money to pay the original debt. And then, it snowballs," said McQueen.

Loan sharks

Locked out of formal banking options, many migrants turn to people within their community for loans but are often exploited, said Catherine Wohlers from the England Illegal Money Lending Team, which investigates and prosecutes loan sharks.

Around 1 million people in the UK have borrowed from a loan shark, or illegal money lender, according to a 2023 report by the Centre for Social Justice.

Wohlers said many migrants have borrowed thousands of pounds to pay for groceries, bills, rent and remittances sent home.

She said two Filipino women were prosecuted last year for illegally lending 4.2 million pounds ($5.68 million) to other Filipinos, mostly healthcare workers, and charging exorbitant interest.

Wohlers said the shame of being in debt keeps migrants under the control of loan sharks, who also threaten to reveal details to the wider community and immigration officials, which migrants falsely believe could lead to deportation.

"That's what keeps them paying above and beyond what they've originally borrowed," Wohlers said.

Immigration crackdown

With the government vowing to cut net migration to Britain over the next four years, migrants are increasingly falling prey to scams, charities said.

"Refugees desperate to reunite with their child or spouse also face the costs of family reunion visas, legal and travel costs, with very little assistance available," said Penny Sims, a spokesperson at the British Red Cross charity.

McQueen said migrants are often sent letters or messages from scammers pretending to be from the Home Office, the ministry overseeing immigration to the UK.

"It's so cruel, but something that's very specific to refugees and asylum seekers are fraudulent messages claiming to be from the Home Office saying, 'Good news, we're going to give you your status. You just need to pay us and go on this link,'" she said.

Zahra, an Afghan immigration legal adviser in the UK, who used a pseudonym for privacy, said several of her clients have paid thousands of pounds for Afghan resettlement schemes even though applications are free.

"We received emails from community members saying, 'I paid the fees, but nothing has happened with my application.' We asked them to share the email they received... and it was very clear that the scammers faked (an official) email," she said.

Immigration advisor Yuliia Ismail from Settled, which supports European Union citizens and Ukrainians in Britain, said she has seen cases of Ukrainian refugees being charged by scammers for visa applications that were never submitted.

Ismail, who offers free immigration advice, said charities like hers are overwhelmed by people seeking visa support.

"Scammers do take advantage of how busy advice agencies are. People will want that information anyway, so they will ultimately ask someone for it," said Aspden.

"Financial capability for refugees, migrants has been neglected completely. People have been cheated out of funds in many different ways and it's because they have been desperate," he said.

($1 = 0.7389 pounds)

(Reporting by Lin Taylor; Editing by Ayla Jean Yackley.)