Your guide to common financial scams and how to avoid them

Figures from Barclays Bank show that financial scams increased by two-thirds in the first half of the year, as fraudsters preyed on our worries about the coronavirus pandemic.

From the sale of face masks that never turned up, to NHS phishing scams and the hijacking of the Track and Trace system, scammers have been all too willing to take advantage of the crisis.

UK Finance confirms that impersonation scams alone increased by 84% compared to the same six-month period last year. These are the scams where fraudsters pretend to be tax officials or bank staff to get money or personal information from you.

Thankfully, we can help you understand the types of scams that are out there, and what to look out for to avoid falling victim to one.

Keep reading for your guide to outfoxing the scammers.

1. Push scams

Research from Santander in June found that 45% of customers would transfer money out of their account if prompted to by someone in authority.

This type of impersonation fraud (also known as Authorised Push Payment (APP) or ‘safe account’ fraud) accounts for millions lost to scams by UK consumers each year.

And it’s on the rise.

Scammers will phone and try to convince you they’re a legitimate caller – a police officer or bank worker, for example. They’ll tell you that your account has irregularities and that you need to transfer your money to a ‘safe account’. In reality, you’ll be transferring your cash directly to the fraudsters!

Impersonation fraud increased by 94% between January and June 2020 compared to the previous year, at a cost to UK customers of more than £36 million.

If you add other impersonation frauds (callers pretending to be from HMRC or your power provider maybe?) and that figure rises to just shy of £58 million.

What can you do?

Remember that your bank, or any other institution, will never ask for full account details or passwords over the phone, and would never ask you to transfer money in this way.

If you are at all worried, hang up the phone.

2. HMRC phishing (and smishing) scams

During the March lockdown, there was a huge increase in the number of phishing scams, where official-looking emails try to con you into sharing personal information. The same was true for smishing scams – those that use text messages instead.

Emails purporting to be from HMRC tried to fool people into clicking a link for a tax rebate or a government grant. The result was that the victims passed their bank details directly to the fraudsters.

You might also receive text messages telling you that you’ve been fined £250 for breaking lockdown rules. Or that you are in line to receive a goodwill payment. Be wary, as both are scams.

What can you do?

If you worry that a text message or email isn’t genuine, delete it immediately. And don’t click on any links or ring any phone numbers the message might include.

If the email claims to be from HMRC, forward it to phishing@HMRC.gov.uk and then delete it. Also, visit the HMRC phishing scam page and you can see examples of what a scam text and email might look like.

3. Pension and investment scams

The government banned pensions cold calling in January 2019. The practice hasn’t stopped entirely, but the ban does make it easier for you to spot potential scammers.

You might receive calls telling you that you can access your pension early or offering you a ‘once in a lifetime’ investment opportunity with ‘guaranteed returns’.

There are very few circumstances (other than ill health) that would enable you to access your pension fund early. And a ‘too good to be true ‘investment opportunity is probably exactly that.

Look out for these possible red flags:

• A cold call – it is almost certainly a scam, so don’t give out any personal details
• Phrases such as ‘take your pension early’, ‘free pension review’ or ‘guaranteed returns’
• Unusual or high-risk investments
• Time-sensitive offers and close deadlines designed to panic you into making a bad decision

Taking a pension early could result in a 55% unauthorised payment charge being payable to HMRC, on top of the fees you pay to the scammer. High-risk investments could see you lose your money, even if the opportunity is genuine. It’s more than likely though that the investment doesn’t exist at all.

Pension and investment decisions are important. You should take time to think about them and always come and speak to us before you make any decisions.

What can you do?

If you think you’ve been approached by a scammer contact Action Fraud on 0300 1232040. You might also try the Financial Conduct Authority’s ScamSmart website or check their list of authorised firms.

Get in touch

Scammers are quick to take advantage of any situation, and the coronavirus pandemic is no exception. Local and national lockdowns, as well as fears about the virus itself, can make us vulnerable to fraud, but we can fight back.

Knowing the types of scams that exist, what to look out for, and what to do if you are approached is vital in preventing yourself from becoming a victim.

If you are in any doubt about any of your transactions with Logic, please email us at info@logicfinancialservices.co.uk or check with your adviser.