Being asked to pay a fee to get a prize or a loan

If you have been told you have won a prize, or offered a loan, and then asked to pay a fee before the money arrives, the request itself is the answer. A genuine lottery will never ask you to pay a fee to collect your winnings¹. Genuine grants and schemes do not require upfront fees². And it could be a scam if you are asked by a lender to pay a fee before you are offered a loan³.

This type of fraud is called payment in advance fraud, or advance fee fraud. It is when a criminal contacts you by text, email or social media and convinces you to pay an upfront fee for goods or services which never materialise⁴. The excuses vary: fraudsters will say you have to pay upfront to get the goods or services, or for things like credit checks and tax⁵.

The sums involved are not small. Advance fee scams accounted for £58.4m of losses in 2025, the highest ever recorded for this scam type, within total authorised push payment fraud losses of £576.4 million, a 19 per cent increase on the year before⁶. The rest of this page sets out how the scam works, the versions doing the rounds, the warning signs, and what to do if you have already paid.

A genuine prize or loan never needs an upfront fee

The single rule that settles most of these cases is that money owed to you is never released by money paid from you. A genuine lottery won't ever ask you to pay a fee to collect your winnings⁹. Legitimate organisations will never ask you to pay fees in advance to release money, recover funds, or secure a loan¹⁰.

That holds across the products people are most often targeted over. Genuine grants and schemes do not require upfront fees². Individual voluntary arrangements, the formal debt solution, carry no upfront fees¹¹. Some lenders advertise products with no fees of any kind¹². Even in the courts, where fees are a normal part of the process, there are procedures that carry no fee at all: applying to vary a county court judgment for redetermination costs nothing¹³.

The reason the rule is so reliable is that a real prize or a real loan is a contract in your favour. A prize promoter wants to hand over winnings because the publicity and the ticket sales depend on it. A lender makes its money from interest and charges once the loan is running, not from a payment before it starts. When the only way to receive money is to send money, the money is moving in one direction, and it is not towards you.

Where a fee is genuinely part of a financial product, it is charged by a regulated firm, disclosed in advance in writing, and taken from the money you are already borrowing or investing rather than demanded separately before anything happens. A demand for a separate payment, to an individual, before any money reaches you, is the pattern of a scam rather than a product.

How advance fee scams work: tax, credit checks and release fees

The mechanics are consistent. The fraud works by asking you to hand over your bank details, and pay an "advance fee" in order to complete the deal¹⁴. Fraudsters will explain that a fee is for something such as a credit check, tax or even to release the goods or services¹⁵. Often, they say it is to cover things like tax, credit checks or to release the item¹⁶.

Each excuse is chosen because it sounds like something a real organisation would say. Tax sounds official, and people know that tax exists on money. A credit check sounds like underwriting, the process a lender really does run. A release fee sounds like administration. None of them describes how a genuine payment actually works: tax on a UK lottery prize does not exist, a lender runs its own credit checks at its own cost, and nothing needs releasing.

The scam usually has a second act. Once the first fee is paid, a further fee appears, then another, each one justified by a new obstacle that only money can clear. The victim is told the money is nearly there. This is why the losses per victim can be far larger than the first payment, and why the advice is to stop at the first request rather than to pay and hope.

Quick loans, prizes, rentals and online sales: common versions

Payment in advance fraud covers a defined set of situations: job applications, loans, inheritance, goods and services, prizes or the lottery, and delivery fees⁴. Some of the most common scams include telephone lottery scams, sweepstakes, government payouts and other mailings, all promising a large payout with an upfront fee¹⁷.

The loan version targets people who need money quickly and may already have been turned down elsewhere. Being asked to pay a fee in advance for a loan is a recognised warning sign¹⁰. The prize version targets hope: fraudsters tell you that you have won a fake prize. The inheritance version borrows the language of probate, where fees and tax genuinely exist, and misapplies it to a windfall that does not.

Rentals and online sales sit in the same family. A deposit or holding payment is asked for before a viewing, or a seller wants the money before the goods are sent. In the legitimate versions of these transactions, the money and the thing change hands in a way that leaves a record and a route to recover it. In the scam version, the contact details are a mobile number and a PO Box, and the payment route is a bank transfer.

Warning signs before you pay

You shouldn't be asked for an upfront fee to claim a prize¹⁹. That is the first and most important sign. Around it sit a set of others that official guidance groups together: something which sounds too good to be true normally is; you are contacted unexpectedly by a company; you are asked for personal or bank information; you are not given long to make a decision or you feel pressured; you are asked to pay up-front with only a mobile number and PO box as contact details; you are called repeatedly and kept on the phone a long time; or you are asked to keep quiet²⁰.

Postal versions carry their own tells. Bad spelling, a prize that is too good to be true, a general address like a PO Box, a request to send money to claim your prize, and watermarks such as "win", barcodes, seals or codes are all listed as signs of a scam mailing²¹. Competition scams add timing: a message saying you have won before the closing date of the giveaway, an account you do not follow, a private account messaging you, and requests for card details to claim the prize²². Ticket scams rely on urgency, with the seller saying you must pay quickly or you will lose the ticket²³.

Identity theft can also show up as a warning sign after the event: bills or receipts for goods or services you haven't asked for²⁴. If those arrive, treat it as a signal that your details are in circulation.

Does a padlock and https mean a website is safe?

No, and this is where many people talk themselves into paying. A padlock next to a website's URL means the site is encrypted, so what you do on it, such as browse or make payments, cannot be intercepted, but scammers can forge or buy padlocks, so seeing one does not always mean a website is safe²⁵. The 's' in https stands for 'secure', and a safe website's address will start with https rather than just http, with a padlock icon in the address bar²⁶.

Encryption protects the journey, not the destination. A scam site can hold a valid certificate and still take your money. The check that matters is whether the organisation behind the site is real, and that is done away from the site itself: always check the company or organisation contacting you is legitimate by searching for it on Companies House and using the contact details listed there, not the ones provided in the message¹⁰.

Paid a fee already? Tell your bank and report it

If you think you have been a victim of an advance fee scam, report it to your bank immediately⁷. Speed matters because a faster payment can sometimes be recalled if it is caught early, and because the bank's own fraud team can flag the receiving account.

Since October 2024, payment providers have been required by law to reimburse authorised push payment fraud victims, subject to conditions such as the customer being grossly negligent²⁸. If your bank or payment service provider does decide to reimburse you, it may deduct an excess of up to £100 for each scam claim⁸.

Reporting goes beyond your bank. Report any scam, firm or individual to the FCA⁵. Report Fraud is free and sends you alerts about fraud and scams that may affect you²⁹. If the firm claimed to be authorised and was not, the FCA Warning List and ScamSmart are the places to check and report, and if a firm is impersonating a real one, that is a clone firm.

If the bank refuses a refund, or handles the claim badly, the Financial Ombudsman Service can look at complaints about scams where you were tricked into making a payment³⁰. The ombudsman is free to use and its decisions bind the firm.

Advance fee scams: £58.4m lost, 65% of fraud losses

The scale of this fraud is measured each year by UK Finance. Advance fee scams accounted for £58.4m in losses in 2025, the highest ever recorded for the category⁶. The same figure appears in the fraud report as £58.4m of authorised push payment fraud to a malicious payee³².

Set against the whole picture, authorised fraud losses reached £576.4 million in 2025, a significant 19 per cent increase on the previous year⁶. The same total is reported as £576.4m of gross authorised fraud losses³². Advance fee scams are therefore a substantial slice of a growing problem, and the 2025 figure is the highest the category has seen.

For a reader, the number matters less than the pattern behind it. A category that keeps setting records is one where the approach still works often enough to be worth running, which means the messages are polished and the scripts are tested. The defence is not spotting a badly written email. It is the rule at the top of this page: no genuine prize, loan, grant or refund is ever released by a fee paid in advance.

Where to get free help

MoneyHelper, the government-backed money guidance service, explains the types of scam and what to do¹⁰. Citizens Advice covers borrowing and can tell you whether a loan offer is legitimate³. Step Change and National Debtline both publish guidance on dealing with fraud and on spotting and reporting scams²⁹. Age UK and Independent Age cover postal and phone scams aimed at older people⁹. The Financial Ombudsman Service handles complaints a bank has not resolved³⁰.

None of these services charges for the help it gives on scams, and none of them will ask you for a fee to recover money. A firm that offers to get your lost money back for an upfront payment is running a version of the same scam.