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6 financial scams to avoid

The pandemic has proved rich pickings for scammers, with criminals pocketing as much as £1.26bn from people in 2020, according to UK Finance. Citizens advice say that around 36m people have been targeted in the first six months of 2021.

While we can’t stop fraud happening, there are things you can do to limit your chances of becoming a victim, starting with awareness about what scams are out there.

1. Health-related scams

The most shocking scams during the pandemic have involved taking advantage of people’s concerns about their health. Margaret Keenan became the first person in the world to receive the Pfizer Covid-19 vaccine, in Coventry on December 8, 2020. Just six weeks later, Action Fraud revealed that fraudsters had already stolen over £531,000 from people, with 91 reports of vaccine scams. This is likely to be the tip of the iceberg as we know many scams go unreported. There are other health scams to watch out for too:

Scam texts and emails are being sent out encouraging people to provide their bank details in order to receive the coronavirus vaccine or confirm their appointment. A link provided in the texts claims to come from the NHS, with recipients asked to give out personal information and bank details for verification purposes. The Covid-19 vaccination is free and only available via the NHS; you will never be asked to pay for the vaccine, nor to provide your bank account or card details.

The fraud-prevention service Cifas says the sharing of vaccination selfies, alongside vaccine cards, on social media has led to a spate of cases involving identity theft. Criminals are using the personal information on these documents – including names, dates of birth and vaccination sites – to create fake vaccination cards that are then sold on the black market. 

Emails pretending to be from the NHS Test and Trace service are claiming the recipient has been in contact with someone diagnosed with the coronavirus. The intention of this scam – known as phishing – is to encourage you to click on a link within the email that will take you to a fake website designed to steal your personal details or infect your device with malware. 

2. Covid-19 financial-support scams

Since the start of the pandemic, the government has unveiled a number of financial-help schemes, grants and loans to help keep the economy afloat during the crisis. Criminals have been exploiting the confusion around eligibility and people’s concerns about their jobs and their finances. In October the government launched the new Covid Fraud Hotline (0800 587 5030) so that people could report scammers who are illegally targeting coronavirus support schemes. These are some of the scams:

Fraudsters pose as government departments, sending fake emails designed to look like official government correspondence and offering grants of up to £7,500. There are links contained within the emails that are designed to steal personal and financial information from victims. 

Emails for “Covid-19 relief funds” have also been sent out by fraudsters as well as through social media platforms such as Facebook. These encourage victims to fill in a form with their personal information and card details in order to get a sum of money from the government due to the pandemic. 

Fake HM Revenue & Customs emails are nothing new, but additional support measures, and the waiver of a fine if you file your tax return after the January 31 deadline and by February 28, have provided criminals with greater opportunities to scam people. They are sending out emails and texts claiming the recipient owes tax or is due refunds, and urging people to provide their personal information and bank details.

Criminals have also been using official-looking emails, with government branding, offering a “council tax reduction”. The emails contain links leading to a fake government website that is used to gain access to personal and financial information.

Benefit recipients have been targeted with offers to help apply for universal credit, with the scammer making the offer taking some of the payment as an advance for their “services”.

Fraudsters have been using phishing (email scams) and smishing (texting scams) to pretend to be from a bank or building society, or other financial institutions, for many years. People who have contacted their bank over coronavirus help are particularly vulnerable to this type of con, where you are asked to click a link and verify your account and password details. This information is then used to raid your account, and if you lose money this way, you won’t get it back, according to the Financial Services Compensation Scheme.

3. Pension scams

More than £78m was lost by victims of investment and pension scams in 2020, involving fraudsters pretending to be genuine investment firms in order to steal people’s money. Pension fraud has increased markedly since pension freedoms were introduced in 2015, allowing anyone over the age of 55 to have access to their retirement funds. The Financial Conduct Authority’s supervision team opened 24% more pension-scam cases last year. Below are two of the most common types of pension-freedom fraud:

Scammers bombard those aged 55 and over with bogus investment opportunities to try to get hold of their pension savings. One of the most common is investment schemes abroad that promise high returns – particularly appealing at a time of low interest rates. Victims are approached via email, phone or post and pressured with “must have” or “time limited” deals.

“Pension liberation” scams target the financially vulnerable, perhaps those who have lost their jobs, and promise them access to their pension pot before the age of 55, with no charges for early access. It is only in extreme cases where you can do this, otherwise you could pay out huge sums as HMRC deems early withdrawal to be unauthorised and can serve you with a tax bill of 55% – and possibly as high as 70% – of the value of your pot. And on top of this, the fee for the scammer’s service could be 20%-30% – in other words, the victim’s retirement savings are wiped out.

4. Lockdown TV scams

One of the big winners of the lockdown restrictions has been TV, including subscription services. Alongside the rise in viewing figures has come an increase in scams:

Fake texts or emails are sent by criminals claiming to be from TV Licensing and offering six months of TV licence free because of the pandemic.

Victims are also being told there has been a problem with their TV licence direct debit and they need to click on a link to rectify the issue. Instead, they are taken to a fake website that will steal personal and financial information. The DVLA has also been used in this way.

Customers of TV subscription services like Netflix or Amazon Prime have been sent emails asking them to update their payment details by clicking on a link, which is then used to steal their credit card details.

5. Social media scams

Social media has been a lifeline for many people who have been unable to see friends and family during the pandemic, but it is also a hotbed of criminal activity.

The Toby Carvery Facebook scam is a recent one to be wary of. The restaurant chain has warned that fraudsters are using fake Facebook pages to encourage victims to enter their personal details to sign up to vouchers.

Social media websites are being used by criminals to advertise bogus investment opportunities, especially jumping on the Bitcoin bandwagon. Emails and adverts on social media platforms are used to encourage victims to put money into fake investment companies using fake websites.

One of the biggest problems with social media is oversharing and not having the correct privacy settings. Sally Felton, director of intelligence at Cifas, warns: “Criminals have access to technology to scrape your personal details from the web and use these to commit fraud against you. Make it hard for them and be aware of what you’re posting about yourself online.”

6. Boiler room scams

This is one of the most common types of investment scam: investors get a phone call out of the blue and are offered a fake investment opportunity with grand promises of impressive returns. Criminals will use pressure tactics, telling you to act fast and transfer your money straight away or you will miss out on the deal. The Financial Conduct Authority says it is common for victims to part with tens of thousands of pounds. Given that boiler rooms aren’t authorised by the FCA, it is unlikely you will see your cash again.

 

What should I do if I’m a victim of a fraud?

The first thing to do if you are, or think you have been, the victim of a financial fraud is not to bury your head in the sand but to contact your bank or building society as soon as possible. They may cancel your existing card and issue a replacement. Many banks have apps or an online process that allows you to cancel your card yourself – do it! The faster you act, the more they are able to do to protect your money. Report the issue to Action Fraud on 0300 123 2040 and to the police too.

 

Top tips to help you beat the scammers

  • Trust your gut. If an offer, deal, investment or potential partner sounds “too good to be true”, it probably is.

 

  • Take your time. Even if you are tempted by an offer or deal, or concerned by an email purporting to be from your bank or HMRC, take five minutes to think. Don’t automatically click on a link; instead pick up the phone and call that organisation if you are concerned. If it is about investments, insist on time to get independent or legal advice before making a decision – a legitimate company won’t pressurise you. Always log onto a website directly rather than by clicking on links in an email, and make sure the website is secure.

 

  • Keep your wallet shut. Don’t hand over cash or sign anything until you have thoroughly checked someone’s credentials and their company’s. And don’t just rely on glowing testimonials; instead find solid, independent evidence of a company’s success for yourself. Never send money to anyone you don’t know or trust, or use a method of payment that you’re not comfortable with.

 

  • Protect your personal information. Never give banking or personal details to anyone you don’t know or trust.

 

  • Be password smart. Don’t pick your birthday or phone number as a password for anything; make sure it is something strong that scammers can’t guess. Don’t use the same password for different sites and change them regularly.

 

Finally, if you spot a scam or have been scammed, report it to your bank, to the police and to Action Fraud and get help. It is important not to feel embarrassed and bury your head in the sand. These are criminals who use sophisticated methods to prey on people’s vulnerabilities in order to steal their money. Reporting it makes it more difficult for them to scam other people.