Spotting the scammers

Posted by Liz Rees in Latest insights category on 10 May 18

Every day we hear of alarming cases where people have fallen victim to the current scam epidemic. Indeed, UK consumers and companies lost nearly £1bn in 2017 to financial fraudsters whose modus operandi seems to be getting ever more sophisticated. This is in spite of the finance industry having advanced security systems to protect customers and return stolen funds.

To give them credit, banks and credit card companies were able to prevent two thirds of unauthorised fraud attempts (basically theft of your money) in 2017. As a result, total losses were actually down by 5% on the previous year, to £732m according to research by UK Finance (a trade association for the banking and financial services sector).

However, a further £236m was lost to ‘authorised push payments’, when someone is duped into transferring money to criminals posing as a trusted recipient. These are arguably more serious because there is no legal right to compensation once you authorise a transaction.

UK Finance has introduced the Banking Protocol, through which bank branch staff can rapidly alert police and Trading Standards if they suspect a customer visiting a branch is in the process of being scammed. In fact, one of our own customers reported being taken in by a ‘financial advisor’ offering what appeared to be a very attractive investment opportunity. Thankfully, his bank questioned the sizeable payment he was making to an overseas account and persuaded him to reconsider.

As an illustration of how widespread the problem is, Barclays estimate a quarter of UK residents have experienced a scam over the last 3 years. Consequently, you may find that financial organisations are implementing greater security measures to access accounts and questioning you more about transactions. Here at Willis Owen we always ask security questions to verify your identity and our staff are trained to pick up on any activity that looks suspicious.

You are probably aware of the sort of scams to look out for. Investments offered are likely to be non-mainstream, including binary options, carbon credit trading, fine wines, commodities or property in exotic locations. Don’t be fooled by promises of extraordinary returns; they are probably extremely high risk or even a complete fabrication.

Fake emails, letters and calls are known as phishing. I get a lot of emails purporting to be from genuine companies (particularly retailers I have bought from) and offering rewards for completing a survey. They are phishing for data to use to their advantage and I always unsubscribe! If you are unsure about the identity of an email you receive don’t open any attachments or click on links. There have been an increasing number of cases where fraudsters hack into emails to redirect genuine payments to their own accounts.

Always take care when dealing with people who claim to represent companies you are familiar with; fraudsters often come across as very plausible and convincing. They are also clever- I have had phone calls supposedly from BT and they seem to know just when I am having problems with broadband. Under no circumstances give them access to your computer to ‘solve’ the issue. If unsure about a caller, call back the company on a different line. And needless to say, you should never reveal your password or pin.

To help ensure you are not dealing with one of these con artists, the Financial Conduct Authority (FCA) provides some simple guidelines which I’ve listed below:

  • Treat all unexpected calls, emails and text messages with caution. Don’t assume they’re genuine, even if the person seems to know information about you.
  • Don't be pressured into acting quickly. A genuine bank or financial services firm won’t mind waiting.
  • If you're buying a financial product, only deal with an FCA-authorised firm.
  • Always double-check the URL and contact details of a firm in case it’s a 'clone'.
  • Check the warning list of unauthorised firms and individuals they’ve received complaints about. If the firm isn’t on the list, don't assume it's legitimate
You can also check the FCA register of authorised companies and report any company you are suspicious about. Always access the Register from their website, rather than through links in emails or on a firm’s website (it might be part of the scam).

Personally, I would go further and not do any business with cold callers. Respectable investment companies rely on their reputation and do not need to make unsolicited calls to gain new business. It's worth noting that a government ban on pension cold calling will take effect soon, a response to an escalation in scams following the introduction of pension freedoms.

In summary, I would urge you to encourage your family and friends to stay alert in the digital age. We have the chance to be actively more selective about sharing our data with the arrival of the new General Data Protection Regulation (GDPR) this month. However, remember that fraudsters don’t usually comply with the law, so a little extra vigilance could save you a big headache and lot of money!