How to stay one step ahead of scammers

CROOKS stole a staggering £1.3billion in a relentless barrage of fraud and scams last year, a new report reveals.

The financial consequences for those tricked by fraudsters can be devastating, wiping out pensions and savings, and leaving victims penniless as more than half of the money stolen is not refunded.

New figures from banking industry body, UK Finance, show the scale of fraud taking place and how thieves keep coming up with ever more sophisticated scams.

When experts explain how to spot one, a common piece of advice they give is if an investment looks too good to be true, it’s probably a scam. The problem is we don’t know enough about investments to work out whether what we are being promised is actually too good to be true or not.

There is a glimmer of good news as research from investment firm Hargreaves Lansdown found that we are getting better at spotting some common scams. Impressively, 85% of people know that if they get a call out of the blue with the offer of a “pensions review” it’s likely to be a scam. Meanwhile, 87% of people know that if they’re told about an opportunity but they need to act fast to take advantage of it, they may be dealing with a fraudster.

The older we are, the more confident we are we can spot scams: 89% of those aged 55 and over said they would spot one, compared to 82% of those aged 35-54 and 68% of younger people.

However, when it came to working out whether something on offer was so good it was probably a scam, we fell short.

One useful rule to remember is investment is always a balance of risk and reward. If you’re prepared to face a relatively high risk, you could potentially make more money. But on the flipside, if things don’t go to plan, you could potentially lose more too.

If you’re not prepared to take a risk, then you can expect much smaller guaranteed returns. It means alarm bells should start ringing if you’re offered big gains without taking a risk – because this just isn’t how things work.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, says: “Right now, the very best savings rate on the market is 3.5%, available to First Direct current account holders who take out a regular saver account. You can’t deposit a lump sum: you can only drip-feed money in each month, and after a year the account will be closed.

“If you want to save a lump sum, the best rate around is 2.9%, which you can get by tying your money up for five years in a fixedrate account with PCF Bank. It means that anyone offering you 4% or more without any risk at all should ring alarm bells.”

Unfortunately, only around one in three people said they’d be worried if they were offered 4% or above, and more than one in four wouldn’t be worried until a scammer was holding out the hope of a “sure thing” paying 10% or more.

Savings rates have been low for far too long, so it’s no wonder many people are looking for ways to earn a better rate on their cash.

Crooks know this and are coming up with smart scams that can be really difficult to spot. Don’t be lured in by a fancy brochure, impressive website or someone telling you they have made their fortune in record time. It’s easy and cheap to create something that looks convincing and simple to impersonate a reputable, existing company.

Stop, take your time and think hard before parting with any money. Check, double check and thoroughly check again.

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Anyone offering you 4% or more without risk should ring alarm bells