STOP THE SCAMMERS
It is the crime of the century. An explosion in fraud is costing us £11BILLION a year – so fight back and join our campaign to...
FRAUD is the biggest threat to our personal finances.
Some £11billion of fraud was committed in the last year – £210 for every person over age 16. Fraudsters, using the twin forces of slippery spiel and wizardry of the internet, currently hold the upper hand, stealing money indiscriminately from victims.
In a four-page special report, The Mail on Sunday explains how you can protect your finances from fraudsters and cyber criminals.
INVESTMENTS
THE SCAMS: The fraudsters promote unbeatable investment opportunities and claim to work for a company with a proven track record and high calibre credentials.
The scams centre on the sale of shares, land, precious gems, wine and art that are either worthless or non-existent.
Often the fraudsters cold-call victims and build a rapport over several weeks or months – backed by a legitimate-looking website and convincing marketing literature.
Eventually, the hard sell comes and victims are put under pressure to get involved or lose out on the chance of high returns from a winning investment.
Once money is handed over, the criminals often come back to say the investment is performing well but more money is needed to inflate returns further.
But once every penny is squeezed from investors, the fraudsters disappear with the money, stop responding to calls, or simply declare the investment has failed.
According to City regulator the Financial Conduct Authority, victims of such investment fraud lost an average £32,000 last year.
HOW TO AVOID THEM: The regulator is urging investors to better research companies they trust with their money.
Its ScamSmart campaign aims to protect those most at risk of investment fraud – the over-55s.
The latest phase of this campaign, to be rolled out this week, concentrates on the need for The watchdog’s research shows more than half of over-55s who invest in financial products do so alone without any input from family or friends. This is despite the fact that a fifth of people over 55 have been targeted by an investment scam in the last three years, rising to a third of over-75s.
Tony Neate, fraud expert and chief executive of Get Safe Online, says: ‘Get someone else involved. You need a third party perspective because cold-callers are so convincing. Someone else might identify a clue to a scam, such as a company based in a different place to where it claims to be calling from, it having no landline contact number on its website or no physical address.
‘If someone is claiming to work for a company that handles millions of pounds worth of investments they should be operating out of a real property and registered address.’
Check the regulator’s warning list to find out whether an investment could be a scam. Visit scamsmart.fca.org.uk. It is common for fake companies to mimic the names and websites of genuine firms with only slight differences. So match names and business contact details carefully if using the financial services register to check a firm. Visit register.fca.org.uk.
TV presenter Nick Hewer, who is supporting the ScamSmart campaign, says: ‘I am outraged at the persistent threat investment scams pose on society, especially those over 55 who are the prime target. The amount of money being lost by victims is worrying. If you are contacted by someone offering an investment out of the blue, just put the phone down.’
BANKS
THE SCAMS: Your account may be hacked into and money withdrawn – as was the case for 9,000 customers of Tesco Bank last month. Alternatively, your debit card could be cloned at a dodgy cashpoint with a camera, or ‘shoulder surfer’ standing behind you in the queue, watching you enter your PIN. Whichever route fraudsters take, the outcome is the same – money is stolen from your bank account. But it is important to know the methods used.
One of the biggest threats comes from phishing, vishing and smishing – the buzzwords for scam emails, calls and mobile text messages.
With emails and texts, clicking or tapping on any suggested links you think are from your bank can lead you to an unsafe webpage that asks for personal details. These can be used to gain access to your account or can download ‘malware’ on to your device – computer software allowing criminals to ‘read’ log-in details when you access an account.
Lawbreakers who call will spin a story about security problems with your account, take you through official-sounding steps to confirm your identity and protect your money, but will ultimately convince you to surrender a password or transfer money to a ‘safe account’.
Even if the name of your bank appears on your mobile screen during an incoming call, you cannot trust the caller is genuine.
This is because of ‘telephone spoofing’. Criminals use internet software so the number showing up on screen looks to be from your bank. This instils trust from the outset and means you are more likely to comply with a caller’s requests.
HOW TO AVOID THEM: The way people make payments from their accounts will soon undergo the biggest change in 60 years.
Regulators, banks and consumer groups are proposing a new safeguard called ‘confirmation of payee’. People who send payments to another account will be forced to doublecheck a recipient’s details, including their name rather than just account number and sort code, before any money is transferred. The timeline for introducing this – and a ‘request
to pay’ feature allowing customers to approve direct debit payments before money leaves their account – stretches to 2020. For better protection now, check bank statements for suspicious transactions so you can act quickly if anything is amiss. Shred any personal information sent by post.
There is little you can do if a hacker has broken into your account – which can happen regardless of whether you bank online or not. Your information is stored digitally even if you do not transact that way.
If the bank is responsible for a hack-attack you will be refunded. But you are more vulnerable if you lose money to one of the ‘ishing’ methods – phishing, vishing and smishing. Never trust that an email or text claiming to be from your bank is genuine without checking and do not click or tap on any links. Open a new window on your internet browser and carefully type the real website address for your bank and log in to your account this way. If someone on the phone is claiming to be from your bank, think twice. Do not agree to transfer money and do not share any passwords or debit card PINs. Your bank will never ask for a PIN or for you to transfer money to a ‘safe’ account. Neate says: ‘Use strong passwords and different ones for each account, install security software on your computer and update apps on your smartphones.’
PENSIONS
THE SCAMS: Since new pension freedom rules in April last year – allowing the over-55s greater access to their retirement funds – fraudsters have been handed fresh opportunities to swindle millions of pounds from pensioners.
Scammers start their cash trawl with convincing cold-calls, texts and emails, often supported by realistic websites and brochures – all making tempting offers from ‘free pension reviews’ or ‘healthchecks’ to ‘pension loans up front’ and investments with high returns or cashback.
The smooth sales patter often involves a warning that investors should act fast not to miss out. Sometimes they arrange for courier firms to pick up completed pension transfer forms.
Pension firm Phoenix, which has prevented £30million of fraud being committed on customers over the past four years, says fraudsters use a box of tricks to tempt potential victims.
These include preying on fears about low interest rates, the importance of diversifying portfolios, not trusting the big banks and unpredictable stock markets creating ‘high’ demand for alternative investments.
Schemes used to lure the unsuspecting include investments in hotel developments in Cape Verde, forests in Costa Rica, betting on Australian corn futures and dubious green energy projects. Other exotic offerings feature fine wine, storage pods, burial plots, truffles, syndicate betting on football matches and even German listed buildings. They all have in common high charges, no regulatory protection – and little or no chance of an investor being able to cash in the investment.
In many cases the underlying investments are next to worthless or do not even exist. To rub salt into the wound, any transfer made from an existing pension may be unauthorised and result in a tax charge of up to 55 per cent on money that later disappears.
Some fraudsters pass themselves off as working for official organisations,
such as Pension Wise. The problem has become so severe – with 250million cold-calls a year – that the Government has now announced a ban on pension cold-calling.
But this will take months to put in place, giving conmen a window of opportunity to make hay before the legislation bites. Philip Kline, of Phoenix, says: ‘We expect scam text messages and emails to increase following the ban.’
Darren Cooke, director of Red Circle Financial Planning, was behind a petition that encouraged the Government to end the cold-calling scourge. He says: ‘The Government claims £20million a year is lost in pension scams, but I say add a nought to that figure and you are closer to the truth.’
HOW TO AVOID THEM: Key terms to set alarm bells ringing include:
PENSION UNLOCKING – If someone calls out of the blue promising to help you ‘unlock’ your pot before the age of 55 it will be a scam.
QROPS – Qualifying Recognised Overseas Pension Schemes. These can be legitimate schemes set up to transfer pension money overseas, such as when someone retires abroad. But increasingly they are
used to swindle pension savers out of their money. Darren Cooke says: ‘Walk away if you see any mention of this type of pension, particularly if the firm is based in Portugal, the Cayman Islands, Malta, Gibraltar and the Isle of Man.’
SSAS – Small Self Administrated Schemes. There has been a sharp rise in scammers attempting to switch people’s pensions into fraudulent single member SSAS plans, a type of pension that allows a greater choice of investment.
The sales pitch is that savers can get ‘cashback’ or a ‘non-repayable loan’ but this is an unauthorised payment that will attract a tax charge.
If you have any doubts about the authenticity of a caller contact The Pensions Advisory Service at pensionsadvisoryservice.org.uk or Pension Wise at pensionwise.gov.uk.
Also contact your pension provider, especially if you have triggered a transfer but have changed your mind – it may be possible to stop it.
Pension decisions are vital to get right. Consider contacting a professional financial adviser with pension experience. Find one through unbiased.co.uk, vouchedfor.co.uk or thepfs.org.
The Personal Finance Society has launched a campaign involving its 36,000 members taking a leading role in stamping out fraud. Keith Richards, chief executive, says: ‘Personal finance professionals are better placed to spot scams so we are asking members to spend 15 minutes each month to help identify and report potential scams.’
If you think you have fallen victim call Action Fraud on 0300 123 2040.