Common Financial Scams and How to Avoid Them
26/05/2021
While phishing scams will try to get information from you to launch a more sophisticated attack, financial scams will often try to get money from you directly. Please read on to learn about the most common ways scammers will try to convince you to pay them or to give them the details they need to take money from you.
Pension and investment scams
Pension scams can be some of the most damaging scams that exist. Many will involve a fraudster trying to convince you to transfer your entire pension, wiping out your life savings in one go. The Pension Scams Industry Group estimates that £10 billion has been lost by 40,000 people since 2015. Investment scams are similar to pension scams but aim to get you to transfer existing investments or previously uninvested money.
Pension and investment scammers will often offer unusual or high-risk investments like overseas property or storage units. They may advertise their scam as an ethical investment such as renewable energy bonds. Investment scammers may be similar, or may also pose as a genuine investment site or platform.
You may be approached by:
- Cold calling. Cold calling about pensions is illegal under any circumstances
- Social media
When searching or visiting websites:
- A website may be legitimate, it doesn’t mean the adverts on it are
- Comparison websites may look genuine, but it is important to check any recommendations you get first
- You should check the web address is correct before inputting any information, the website may be a clone
In many of these scams the money will not be invested at all, but simply stolen. Even if the money is actually invested, it will often be at far more risk than advertised, may not achieve the returns that are promised, and is unlikely to be protected.
If you are ever approached out of the blue about financial services, it is most likely a scam. You can check the financial services register to see if a company is genuine. Please contact us if you are unsure about a product or service you have found are offered.
Impersonation fraud
Impersonation scams are generally very sophisticated. They may involve personal contact with someone over the phone or perhaps by email or text message. The scammers may use information gathered from phishing, data breaches or even by looking at publicly available information on social media to make their story seem more convincing.
Another kind of impersonation fraud is when someone poses as a bank or the police and claim that they are trying to protect you from fraud that has already occurred on your account. There have even been cases where scammers posed as the police investigating a bank, who ask for you to send money to an account for ‘analysis’.
Criminals will often try to create a sense of urgency here. They may say your money is at risk, your account will be blocked, or you will face criminal charges if you don’t do what they say quickly. A genuine organisation will never do this, you should always have time to think clearly. You should be especially suspicious if someone asks you to share account details or passwords or set up a transaction to another account for ‘safekeeping’.
Impersonation scammers may pretend to be from utility or broadband companies and try to get your account information. Often they claim that your services have been hacked. There have been some cases where scammers have asked for bank details to pay compensation but have taken money instead. If a company you are already using is asking for your banking details this is likely to be a scam. The genuine company will already have this information.
Fake invoice and rebate scams
These scams are a kind of impersonation scam will commonly pretend that you either owe money, have won money or that you are due a refund. These types of scams are still sometimes done by post. However, email, SMS messaging, social media messages and calling your phone in person or with a recorded message are all common. Scammers often use identity masking technology, so their name displayed as the sender looks genuine. However, you can still check that the number, email address or account is the one that you are normally contacted by.
Again, criminals will often try to create a sense of urgency. They may give very short deadlines to pay them or give them your details for a ‘refund’ which will be used to steal money. One example is real people or automated messages claiming to be from HMRC instructing you to pay an overdue tax bill or that you must return an accidental refund. Another common scam at the moment is a call with an automated message pretending to be from Amazon which claims you have been charged for a Prime subscription.
Since we left the EU as there has been much confusion around unseen import charges. Scammers have taken advantage of this with texts or emails which pretend to be from delivery companies. Utility and broadband companies are also commonly impersonated. When you receive a text or email telling you are due a refund or have a charge to pay you should not click the link provided. Instead, you should visit the company’s website directly, even if you think the message is genuine. This way you will be sure to only input your details into a genuine website. Alternatively, you can phone the person or company to confirm the contact is genuine.
Fake invoice email scams are likely to:
- Come from an email address, phone number or account that is not the same as the regular address that contacts you
- Create a sense of urgency by giving you a short deadline or threatening consequences for not following the directions specified
- Ask you for personal information
- Contain a link that takes you to a fake web page where you can input your information or a fake number to call
If you put in your details the scammers may simply take the amount they have already specified. They may even be able to take more money. The information they have gathered may also be used to launch a more sophisticated scam against you.
You should never reply to a scam message as this will notify the scammer that your number/account is active. Instead, you should forward suspect scam emails to report@phishing.gov.uk or scam texts to 7726.
What to do if affected by a financial scam:
1. Get in touch with your bank: If money has already been taken then the sooner you contact your bank, the more likely it is that they will be able to recover your money. Even if nothing appears to have happened yet, you should call your bank and let them know. They will then be able to block suspicious transactions
2. Contact Action Fraud: Action Fraud is the UK’s official reporting centre for fraud and cybercrime. You can report scams online here, by forwarding suspect scam emails to report@phishing.gov.uk or reporting scam texts to 7726
3. Get support if you need it: This document details the services available for emotional financial and legal support if needed
4. Stay Vigilant: Being scammed once increases your chance of having more attempts against you in the future. Your details may be uploaded to a scammers network which other scammers use to find new targets
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