ASIC is warning people about a lending scam following reports from victims who have lost thousands of dollars.

Borrowers are told that before a loan can be advanced they must first forward money for insurance, tax or other payments to a specified personal account or transfer money to an overseas account using Western Union or similar wire services. However, after borrowers make these payments, they never receive the loan.

ASIC has received reports of borrowers sending amounts in excess of $33,000.

The scammers, who are believed to be operating from overseas, appear to have hacked the legitimate websites of some small lenders to target consumers. They have also set up fake websites and internet banner ads offering fake loans. The fake loan contracts look like legitimate contracts, but are often made in the name of an unregistered business or a company the scammers do not represent. Borrowers are misled by the inclusion of identifiers, such as Australian credit licence numbers and Australian Company Numbers, belonging to genuine licensees.

ASIC Deputy Chairman, Peter Kell, said borrowers should never send any upfront payments before receiving the loan.

'Legitimate lenders who are authorised under the credit laws in Australia will collect upfront costs out of the loan disbursements when the loan is advanced, in accordance with the terms of the loan contract. They never ask you to transfer money to a third party or an overseas account before a loan is drawn down.

'ASIC urges anyone who needs to borrow money to be mindful of these scams. Never deal with anyone you cannot reach through publicly available contact details. Do not respond to any requests to send money before receiving the loan or you risk suffering significant financial loss', Mr Kell said.

More information about borrowing and credit and tips to avoid scams is available from ASIC's Moneysmart website.