COUNTING COST
Conal Gregory gives advice on how to avoid becoming a victim of fraud
TODAY MARKS the anniversary of one of the most spectacular fraud events ever. Exactly
25 years ago, the UK’s oldest merchant bank, Barings, collapsed, following £827m losses sustained by rogue trader, Nick Leeson.
Barings was founded in 1762, making it the world’s second oldest bank after Berenberg. Singapore-based Leeson had made fraudulent investments, primarily in futures contracts. The effects of his actions remain a warning to all.
Fraud accounts for £190bn annually and is over a third of all crime with 3.8m incidents in England and Wales alone in 2019. Yet even this staggering number underestimates the true size as much goes unreported. Many criminals take the risk as just one in 50 reports results in a suspect being caught.
Police forces have very few staff – one in 200 officers – working on fraud and direct enquiries to Action Fraud which is overseen by the City of London Police. It suffers from high staff turnover with many cases noted but not investigated.
Sir Craig Mackey, a former deputy Metropolitan commissioner, reported last month that fraudsters “operate with impunity”.
He discovered that the Action Fraud’s computer system required urgent repair and that officers lacked the skills to investigate complex cases.
One popular online scam is to pretend to be a well-known retailer and to offer articles, frequently clothing, even copying illustrations from the genuine site. Fraudsters can clone a website code without difficulty. They will take your money and may even supply a near worthless item.
Once any victim realises the problem, it is vital to contact your card supplier. If this is a credit card, there is protection under the Consumer Credit Act 1975, provided the value is £10030,000 and the payee was the main account holder.
If using a debit card, apply within 120 days and ask for a chargeback investigation and refund.
Scammers can pay Google to obtain either the top or leading advertisement when key words are searched for.
The regulator, the Financial Conduct Authority, has no power over Google but can raise concerns. Action Fraud makes representations to the countries where such problem websites are located but says China can take a year for any change.
If you offer goods online, take care about any emails that appear to originate from PayPal. They say funds are due following an eBay auction.
Respondents are then asked for tracking numbers in the expectation that the article will be sent before payment has been received. In the last quarter of 2019, over 3,000 such fraudulent claims were made with sellers losing over £1m.
Check with PayPal’s official site before releasing anything.
Around 90 per cent of all crime committed against over 65-year-olds is fraud-related. A worrying one-third of elderly people are too ashamed to ask for help.
Personal identification numbers (PIN) and passwords are still the norm but with such easy hacking the next stage is biometric data which is personally unique for fingerprints, eyes and faces. Unfortunately, such information can be compromised as became clear on Suprema’s database, BioStar 2, last year.
Take care when revealing part of a PIN. One scam is to note two of the numbers and for the fraudster to claim they had not heard properly and request two alternative ones, thereby obtaining your entire code.
Telephone calls purporting to come from a bank, building society or even HMRC that request cash are fraudulent but still unfortunately actioned by innocent victims.
Even police, including the Serious Fraud Office, have been impersonated.
A regular trick is to say that a suspect sum has been spent and that the account holder needs to withdraw cash to protect themselves.
The fraudster arranges for a courier to collect the money with a promise to keep it safe. Almost 2,000 such scams occurred in 2019, up from 1,251 the year before. One couple received multiple visits and were duped into parting with all their savings.
With internet banking fraud running around £80m, banks need to keep customers up to date. In January many failed to warn that online banking should not be used unless the newest version of Microsoft Windows had been installed. Mackintosh computers were not affected.
Take care with some challenger banks. The Royal Bank of Scotland digital subsidiary, Bó, discovered that about 30 per cent of applications were fraudulent. If criminals had succeeded, the accounts would have been used to launder money.
Regularly look at the information held on your personal file with the credit reference agencies, such as Equifax, Experian and Leedsbased TransUnion. This can alert to such changes as a credit card and even a loan incorrectly taken out in your name.
Through impersonation, a great deal of credit can be achieved. The 18-34 year-olds form a target group as so many use digital channels to share personal data.
Millennials are over-trusting of mobile phones and the internet. They are far less likely to check a bank statement than any other age group unless an alert is received on their smartphone.
Challenger banks appear to have greater security than high street names to spot signs of data breaches. Monzo, for example, identified 1,300 of its customers affected by a British Airways breach and ordered replacement plastic as a precaution. Monzo does not rely on passwords to access an app as it considers them insecure and prefers a PIN is used.
Be cautious in revealing
personal information on social media. Fraudsters have been able to gain sufficient information to establish bank accounts in other people’s names. With cybercrime paying so well, never click on to a link in an unexpected email.
Cold calls to offer advice about an investment, particularly a pension, should be repulsed, even if it is said to be complimentary.
Significant losses can occur where someone assumes the title to land. The Land Registry
has set up a free Property Alert service which provides an early warning of suspicious activity on someone’s property.
Cases have arisen where someone impersonates to use forged documents to sell or mortgage a home.
Seek the view of a trusted professional, ideally a qualified wealth manager. A good website to consult on how to protect yourself has been created by the trade organisation, UK Finance: takefive-stopfraud.org.uk.