If you are one of the millions of people who received a text recently from the Royal Mail telling you that you need to pay for an undelivered parcel, you probably already know it’s the latest attack by criminals.
According to media reports, the text is part of an elaborate plan to access personal details that criminals later use to steal victim’s money.
In the year leading up to September 2020, Action Fraud – the UK’s national reporting centre for fraud and cybercrime – received more than 17,000 investment scam reports. The total cost of the scams was £657 million, a 28% increase on the previous 12 months.
But sadly, the pandemic did not slow fraudsters down, it instead created new opportunities. According to the BBC, there were more than 6,000 cases of Covid-related fraud and cybercrime recorded by UK police forces since 1 March 2020. The estimated cost to victims? £34.5 million.
Read on to discover the most common ways criminals make contact, and how you can protect your money.
Search engines can be a criminal’s playground
According to Which?, search engines are “easy hunting ground” for criminals looking to target your money using paid-for adverts.
Bogus adverts and comparison sites can be particularly difficult to spot, with Which? claiming many bogus investment companies advertise to appear at the top of search results.
Typically, fraudulent adverts offer returns slightly higher than standard rates for investments or pensions, making them look tempting without setting alarm bells off. Some may claim to offer “best bonds” and/or “best fixed-rate bonds”, so always treat the claim with suspicion.
Criminals set up a bogus investment company
This is where companies are set up that imitate a genuine investment firm. Using the “cloned firm”, fraudsters offer products that don’t exist, invest in high-risk funds and use a complex fee structure to charge high fees, or offer investments that exist, however keep your money instead of investing it.
The Financial Conduct Authority’s (FCA) warning list had 1,184 companies in 2020 it believed could be running investment scams, twice the 573 it had listed in 2019.
To make it difficult for victims to tell them apart from the bona fide company that they are mimicking, fraudsters typically:
- Provide a number that matches a legitimate firm on the FCA register, and use the same address in emails and correspondence
- Provide realistic-looking fact sheets or prospectuses
- Follow compliance procedures similar to reputable companies, so will ask for copies of ID and personal documents as well as setting up a fake online account.
Before speaking with any investment company, always ensure you check the FCA warning list, but be careful. Even if the company is not on it, an advert or company could be bogus, so double-check against the FCA register to ensure legitimacy and that the company is authorised to deal with the type of investment being offered.
If you use a company online for the first time, always look for a physical address on its website or a phone number and call them if necessary. If there is poor English or grammar, this could be a scam run from overseas.
Fraudsters have a pattern to trick you into their scam
Spotting scam messages, bogus officials and phone calls is increasingly difficult, especially as technology allows criminals to clone your bank’s telephone number, meaning you should never trust caller ID.
Almost 15,000 cases of impersonation fraud were reported to UK Finance – which speaks for the banks and the finance industry – between January and June 2020, a rise of 84% on the previous year that cost victims a staggering £58 million.
However, the National Cyber Security Centre provides a list of tell-tale signs to watch out for.
- Authority– criminals use authority to increase the chances of convincing you.
- Urgency – usually the fraudsters claim you have a limited time to respond and may threaten you with fines or other negative consequences.
- Emotion– the message or caller will aim to create panic, fear, hope or curiosity. Beware of threatening language or false claims of support to make the scam feel more real.
- Scarcity– like urgency, criminals will claim their offer is in short supply in the hope you will not want to miss out.
- Current events – criminals exploit current news stories or big events and may send a message that you would be expecting anyway. Always check the validity of a message or call.
Emails or texts claiming to be from your bank may be “phishing”, designed to capture information that can be used to access your bank or investment accounts. Always treat these messages with caution, as clicking on a link could take you to a bogus website that allows the fraudsters to take your personal and financial details.
Beware of schemes to access your pension early
Fraudsters often target pensioners, offering returns by investing in unusual and high-risk investments like overseas property, renewable energy bonds, forestry and storage units. These can result in heavy tax bills, excessive charges or the pension being stolen altogether.
One claim you should always avoid is the ability to release money from your pension before the age of 55. This is highly likely to be a scam.
Often these are called “pension liberation” or a “pension loan”, as it’s usually claimed you can borrow money from your pension pot. Typically, you can only take money from your pension when you’re 55 or above, unless you have a terminal illness.
Any scheme that claims to release your pension before the age of 55 could result in heavy losses and a tax bill of 55% of what you withdraw.
Get in touch
If you have wealth you wish to invest with a bona fide financial planner or want to check whether an investment opportunity is genuine, email us on firstname.lastname@example.org or call on 01785 876222.