Scam epidemic: how to quickly spot if you're being scammed

October 2021

A recent article in Money Expert revealed that, in the first half of 2021, scammers stole £355.3 million from victims using bank transfer fraud. It’s the first time the amount taken using this type of fraud has exceeded the amount stolen through credit cards.

According to the article, if the amount of money lost to bank transfer fraud continues at its current pace, the total stolen by the end of 2021 could be double the £479 million taken in 2020.

It’s a depressing reminder of just how busy criminals have been during the pandemic. Another is research by Citizens Advice that found more than two-thirds of adults were targeted by scammers in the first half of 2021.

If you have investments or pensions you need to be wary, as fraudsters looking to steal your wealth could target you. Read on to discover the top scams of 2021 and how you might spot a scam if criminals try to make contact.

3 common frauds you need to be aware of in 2021

According to Citizens Advice, there are three particularly common types of scams in 2021 that criminals are using to try to steal your money.

1. Fake deliveries or parcels

This accounted for 54% of contact made by scammers. This is when criminals impersonate trusted organisations to make contact with you and steer you towards a fraudulent website. The website normally asks for personal or financial information, which is later used by criminals to try to steal your money.

2. Pretending to be government officials

More than 40% of scams during 2021 have been criminals pretending to be from government bodies, which may include HM Revenue & Customs. Remember, scammers do their research, so don’t be surprised if they have information on you – this does not mean their request is genuine.

3. Fake investments or get-rich-quick schemes

If you receive offers of investments with “guaranteed” returns, or high levels of growth, be very cautious. While these scams may only make up 12% of frauds, the amount of money involved means the impact on victims can be severe. This is particularly true if it involves your pension.

If you receive offers of investments with “guaranteed” returns, or high levels of growth, be very cautious. While these scams may only make up 12% of frauds, the amount of money involved means the impact on victims can be severe. This is particularly true if it involves your pension.

Criminals are practised at impersonating officials, organisations, and even financial advisers. This can make it extremely difficult to tell them apart from genuine government bodies and companies.

That said, the following steps could help you guard against scammers:

Check that the investment company you are talking to is real

In 2020, the Financial Conduct Authority (FCA) had more than 1,100 companies it believed could be running investment scams on its warning list. To make it difficult for you to tell them apart from bona fide companies, criminals typically:

  • Provide a number that matches a legitimate investment firm on the FCA, and uses the same correspondence details.
  • Provides realistic looking fact sheets and prospectuses.
  • Will follow similar compliance procedures of genuine companies, such as asking for copies of ID.

Before speaking with any investment company, always check the FCA warning list. Even when companies are not on it they could still be fake, so double-check against the FCA register to ensure the firm can offer the type of investment being offered.

Look for the following tell-tale signs

The National Cyber Security Centre provides a list of tricks scammers might use to sound more convincing or pressurise you into making a decision you’ll regret. These are:

  • Authority – criminals will claim to be in a position of authority to increase the chances of convincing you. Don’t assume they are who they say they are, and always double-check using bona fide contact details for the organisation the caller claims to represent.
  • Urgency – fraudsters may claim you have a limited time to respond and could threaten you with fines or other negative consequences. Criminals could also claim their offer is in short supply in the hope you won’t want to miss out. If this happens, contact the organisation they represent independently, using contact details you can trust.
  • Emotion – a message or caller may use language designed to create panic, fear, hope or curiosity. Listen for threatening language or false claims of support to make the scam feel genuine. Again, double-check by contacting any official body or organisation directly.
  • Current events – fraudsters will exploit current news events, and may send a message that you’re already expecting, so always check the validity of a message or call.

Treat an offer to access your pension early with suspicion

Always treat an offer to release money from your pension before you reach the age of 55 with scepticism. Often referred to as a “pension liberation” or “pension loan”, they are typically a scam.

Normally, you can only take money from your pension when you’re 55 or above, unless you have a terminal illness. Accessing it before 55 could mean heavy losses and a 55% tax liability on the amount you withdraw.

Fraudsters may also offer to put your pension in unusual and high-risk investments, saying it will generate greater returns. Be careful, as again, it’s likely to result in a significant tax liability, excessive charges, or your pension being stolen altogether.

Always speak to your financial planner

The most effective way to confirm whether an investment opportunity is genuine is to speak to your financial planner. They can check it for you and help you understand whether it’s right for you.

They could also confirm whether any suggestion regarding your pension is bona fide and tax-efficient.

If you wish to discuss any contact that’s been made, please contact your financial planner directly. Alternatively, contact us below.

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