A web of deception
Online fraud is growing but there are ways you can protect your money, writes David Behrens.
It has always been the case that an offer which looks too good to be true, nearly always is. But it’s getting harder to spot the genuine ones. This is not because the fraudsters are becoming cleverer, though they are certainly more numerous, but because of their presence in listings that many of us assume to be beyond question.
In the last year, it’s estimated that £1.7bn has been lost to internet crooks in Britain alone, and that’s just from crimes that have been reported. We’re not talking here about fake begging emails from African princes of dubious origin, nor even bogus get-rich-quick schemes involving social media – although, goodness knows, there are plenty of those – but sophisticated investment scams promising to make your money work harder in a climate of low interest rates and economic uncertainty.
Many adverts promoting such schemes appear in regular search engine listings alongside genuine investment products, making it almost impossible to tell the difference.
Picking the wrong scheme can have devastating consequences. The consumer organisation Which? says the average loss per investor is £45,000, and that some victims have lost six-figure sums.
Many of these are sites offer up convincing clones of genuine investment sites, in order to instil confidence in would-be victims. When the deception is uncovered, the operators pick a new name and continue advertising as before, leaving the authorities to play whack-a-mole as each new one pops up.
In one case, an 83-year-old retired teacher lost £70,000 to scammers impersonating two legitimate firms, after she searched online for a better savings rate.
She found what appeared to be a site for Prudential, entered her details, and after a representative rang and emailed her the relevant information, agreed to transfer an initial £20,000. The rep then pointed her in the direction of a second bogus site, this time pretending to be a genuine investment house in Australia.
She was able to transfer the money without arousing the suspicion of her bank because it had yet to implement a new security protocol which checks whether a payee’s name matches the account number.
So with security patchy at best, what steps can you take to protect your money? The first rule, says Which?, is to ignore unexpected offers. Opportunities that come out of the blue, whether via a cold call, online advert or through the post, are likely to be either very high-risk or an outright fraud. Even if you initiated the contact yourself, don’t assume you’re dealing with a legitimate firm.
Next, check the Financial Conduct Authority warning list, at fca.org.uk.
This records the details of firms it knows to be operating without permission or impersonating the credentials of legitimate companies. Don’t take it as gospel, though; an unlisted offer could still be a scam.
You can also check the Financial Services Register at the same address, to see if you’re dealing with a genuine, authorised firm. But access the register only by typing in the address yourself, not by following an email or website link which may itself be a clone.
Finally, consider getting independent financial advice, or use a free guidance service organisation like the Money Advice Service. And make it a rule never to enter your contact details on a website you don’t know. It’s an open invitation to every fraudster on the internet to target you in the future.