A recent National Audit Office report laid bare the ugly truth about fraud in the UK, which accounted for 41% of all crimes against individuals recorded in the year to June 2022. The number of frauds and scams recorded have risen sharply over the last year, with the scams becoming ever-more sophisticated. Indeed, Office for National Statistics data shows that people are more likely to fall victim to fraud or cyber offences than any other crime.
Just last week, the Metropolitan Police reported that their detectives were beginning the mammoth task of contacting over 70,000 people they believe have been the victim of a banking scam. Posing as employees of major UK banks, fraudsters have cold called individuals to alert them to a supposed security breach on their account and asked them to access their account whilst on the phone, in doing so disclosing personal information allowing the scammers to clear out their accounts. Police have suggested that one individual has been scammed out of £3m.
These reports are a timely reminder of the need to remain vigilant against fraud and scams, which come in various guises. Whilst frauds involving banking and credit remain the largest proportion of reported crimes, the biggest increase has been seen in consumer retail fraud and advance fee fraud. The latter is where scammers target victims to make upfront payments for goods or services that then do not materialise.
There are some common-sense steps you can take to help defend yourself against financial scammers. Firstly, you shouldn’t automatically trust an unexpected communication from your bank, H M Revenue and Customs or a company you’ve done business with. Always treat any unsolicited calls with suspicion, and do not confirm or provide your personal details or agree to transfer any money.
If you’ve been called by someone claiming to be from your bank, end the call and then phone the official bank number from a different phone. This is important, as scammers can keep the line open if you call back from the same phone.
You should also treat text messages or emails received from a bank or other service provider with suspicion, in particular if the text message asks you to click on an email link provided. The link could direct you to the scammers website, where your personal details can be collected. If in doubt, always log on to a website directly rather than clicking a link in an email.
You should always be wary of cold callers trying to sell you a product or service. Don’t allow yourself to feel rushed into making a financial decision, and always take time to think about whether to take up an offer. This will give you time to seek independent advice if needed.
Scams involving investments and pensions are also on the increase, and the fraudsters are using more sophisticated ways to make offers look and sound more plausible to unsuspected consumers. A good rule of thumb is that you should always reject any unsolicited contact offering you the opportunity to make an investment. The contact could come via a telephone call, email, post or by word of mouth, and may offer an investment that can provide unrealistic returns that sound too good to be true, or a need to urgently make an investment, as not taking up an offer would lose the potential investor a bonus or discount.
The use of “cloning” is also becoming more prevalent. This is where the fraudster sets up a fake firm, using the name, address and other details of a legitimate financial firm. The scammer pretends to be calling from a legitimate firm and may try and use convincing language and provide links to the official firm’s website and literature, to make the potential victim feel more comfortable that they are dealing with a genuine firm.
Scams involving pensions are particularly common. These generally involve cold-calls offering investment opportunities in high-risk investments, such as overseas property, forestry or other unregulated investments. Many of these offers will suggest that the individual needs to transfer their pension to the scammer to access the unregulated investments, and this is often accompanied by high pressure selling tactics employed by the fraudsters. Another potential scam is a call offering the ability for an individual to access or unlock their pension before the age of 55. Again, such a call is highly likely to be fraudulent.
Consumers can protect themselves from investment fraud by checking who they are dealing with. The Financial Conduct Authority (FCA) Financial Services Register lists details of firms and individuals who are authorised to provide investment and pension services. The FCA also provide a list of “cloned” firms on their website, where you can check whether a fake firm has been previously reported.
Given the worrying upward trend in financial fraud, everyone needs to be vigilant to the risk of falling victim to a scam or fraud. Consumers should always treat unsolicited contact with a degree of caution, and you should always check who you are dealing with if you are contacted out of the blue. Trust your instinct, and if something feels suspicious, then report it to Action Fraud, the UK’s national reporting centre for fraud and cybercrime.
If you are interested in discussing the above further, please speak to one of our experienced advisers here.
The value of investments and the income they produce can fall as well as rise. You may get back less than you invested. Past performance is not a reliable indicator of future performance. Investing in stocks and shares should be regarded as a long term investment and should fit in with your overall attitude to risk and your financial circumstance.
