From investment fraud to romance scams: tips to protect your money

interactive investor comments on latest UK Finance fraud losses statistics.

UK Finance has today revealed its latest fraud report covering the first half of 2021, illustrating the scale of fraud taking place and how criminals have shifted their focus to exploit weaknesses outside the banking system.

Key findings

• In total, £753.9 million was stolen through fraud, an increase of 30% compared to the same period last year.
• Unauthorised fraud losses were £398.6 million, an increase of 7%. The banking and finance industry prevented a further £736 million of attempted unauthorised fraud, which means that £6.49 in every £10 of attempted unauthorised fraud was blocked.
• Authorised push payment (APP) fraud losses were £355.3 million, an increase of 71%.
• Impersonation scams: (as previously announced) losses were £129.3 million (up 123%) as criminals posed as delivery companies, the NHS and government departments by sending out scam texts and emails.
• Investment scams: losses were £107.7 million (up 95%) as people were often enticed by adverts on social media offering high returns on investments.
• Romance scams: losses were £15.1 million (up 62%), linked to the rise in online dating during the pandemic.
• Purchase scams: with online retail growing, purchase scams were the most common form of authorised push payment (APP) fraud, accounting for almost half of all APP cases.

Commenting, Myron Jobson, Personal Finance Campaigner, interactive investor, says: “The epidemic of financial fraud in the UK has been compounded by the coronavirus crisis, which fraudsters have used as an opportunity to prey on consumers’ financial worries.

“It appears to be a case of one step forward, two steps back when it comes to financial fraud. While the banking and financial industry has enjoyed success in preventing attempted unauthorised fraud to the tune of £736 million, losses from this type of fraud is still on the up – such is the scale of the problem.

“The internet is a rich trolling ground for unscrupulous individuals to convince unsuspecting victims to part with their hard-earned money. As such, the gatekeepers of the internet – social media companies included - have a starring role in tackling the scourge of financial scams. It is all too easy for fraudsters to promote their scams to the masses, so it paramount that Online Safety Bill put a legal onus on these companies to do more in tackling the issue.

“However, the onus is on individuals to avoid falling prey to financial fraud. Scammers don’t discriminate – they cast a wide net, hoping the sheer quantity of potential victims will yield sufficient monetary haul.

“Fraudsters are only too willing to exploit any ignorance or naivety. To make matters worse, scammers have become more sophisticated in trying to pass themselves off as legitimate. Scams can be difficult to recognise, but there are things you can look out for such as a dodgy looking website address, poor grammar and spelling, a lack of reliable contact information among other. Never trust anyone wanting personal information and remember: If it seems too good to be true then it is indeed too good to be true.”

Myron’s tip to avoid financial scams

If it sounds too good to be true, it usually is
There is no such thing as a free lunch when it comes to your finances. If you come across a proposition that promises ridiculous returns and downplays risk, it probably is too good to be true.

Before you commit to any offers, make sure you do extensive independent research on the company and make sure you check all the information yourself – don’t just take their word for it. There are no shortcuts when it comes to financial management, but help is available. The government’s free and impartial pension wise service is a good first port of call, offering guidance on options for those with a defined contribution pension.

Look out for the tell-tale scam signs
Scams can be difficult to recognise, but there are things you can look out for such as a dodgy-looking website address, poor grammar and spelling, a lack of reliable contact information among other. And never trust anyone wanting personal information.

You can search for a company's details on GOV.UK. This will tell you if they're a registered company or not.

Cold-calling relating to pensions has been banned since 2019, but that still doesn’t stop unscrupulous individuals from using this method to scam people out of their cash. No reputable pensions firm would call you out of the blue to suggest you transfer your retirement nest egg to a better deal. When in doubt, simply hang up.

Also beware of things that signal illegitimacy. If the firm doesn’t allow you to call back, it is most likely because it is a fraudulent enterprise. Also beware of firms that only list mobile phone numbers or a PO box address on their website.

Fraudsters may try to tempt you in by offering free pension reviews. Don’t fall for it. It could be a trick to get you to share personal information.

Do your due diligence
“Be suspicious of any unsolicited correspondence related to your finances. Why take the risk?

“Have a look at the FCA’s ScamSmart website to see if the offer is a known scam. You should only deal with financial services firms that have been authorised by the city watchdog.”

Beware of offers to unlock your pension before age 55
Schemes that offer to unlock your pension before age 55 should be avoided at all costs. These schemes, also known as pension liberation and pension loans, are trying to get you to break the law and are likely to result in you paying huge administration costs and big tax bills, in some cases leaving people with no savings for retirement.

Only in very rare case, such as very poor health, is early access to pension possible.