Struggling families warned to beware of new Universal Credit scam that stops benefits

STRUGGLING families are being warned to beware a new scam that sees fraudsters take out Universal Credit loans in their names, which stops their benefits.

Police forces, councils and Citizens Advice bureaus across the country are warning people to watch out for fraudsters claiming to offer low cost Government loans.

It comes as The Sun reported only last week how one mum lost her £780 a month benefits after a fake loan firm signed her up for Universal Credit and stole her cash.

The scam sees fraudsters take out a so-called Universal Credit budgeting loan in someone else's name.

But these budgeting loans have to be repaid and in the meantime existing benefit payments are stopped with Universal Credit payments not kicking in for five weeks.

It can leave families without any cash or in a worse position under Universal Credit than they were under their former benefits - particularly as the fraudsters are taking upfront payments for these loans.

Salford City Council in Manchester told The Sun it has recently helped three people who have been stung by this scam and Greater Manchester Police warns that it is "particularly prevalent" in the North West of England.

In one case seen by the council a single mum was left worse off on Universal Credit and pushed into rent arrears.

While in another instance the victim said they'd been approached by someone claiming to work for the Department for Work and Pensions (DWP).

Greater Manchester Police has reported the issue to Trafford Trading Standards, which is monitoring the situation.

It wrote: "Around the country we're hearing about this kind of scam - where your personal details are used to sign up for Universal Credit and take out an advanced payment that you're left to pay back.

"Always double check who you're giving your details to.

"These can be especially damaging if you already have benefits that are stopped by the new claim - there may be no way back to the old benefits that may well have been worth more to you.

"We've had reports of people on the doorstep offering loans, or claiming to be from the DWP 'updating' your account, even people in pubs offering to help you get an online loan for a per cent fee.

"People don't realise what has actually happened until it's too late."

Knowsley Council in Merseywide has also tweeted to say it's "urging residents to be extra vigilant" following the reports.

The Sun launched its Make Universal Credit Work campaign where we have highlighted the problems with the new system.

We've called for the five-week wait for cash to be reduced to two and asked for childcare funding to be paid upfront to parents.

We also want people to keep more of what they earn by lowering the taper rate and increasing the work allowance.

The Department for Work and Pensions (DWP) says it expects Universal Credit to reduce losses to fraud, error and overpayments by £1billion when it is fully rolled out.

A DWP spokesperson said: “Identity fraud is a serious crime and anyone who believes they have been targeted should get in touch with Action Fraud on 0300 123 2040.

“We remain vigilant to all forms of fraud and investigate, and prosecute, where appropriate. We are constantly refining our processes to ensure Universal Credit remains both accessible and secure, with those who need support getting it.”

A leaked memo "shows the Government is launching a PR campaign to defend Universal Credit" following horror stories from claimants.

Charities have told MPs, for example, how Universal Credit is forcing more women into sex work for just £5 to survive.

They've also warned that Universal Credit errors are pushing people in to debt.

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