Financial scams on the rise: How to protect your money

Scammers are taking advantage of the uncertainty and stress caused by Covid-19 to approach more people. Figures show financial scams are on the rise and falling victim could affect your long-term security. However, there are warning signs to keep an eye out for to protect your assets.

Since the start of the pandemic, research from Aegon, suggests a fifth of the population have faced approaches by scammers, with 2.8 million falling victim. With some people feeling the pinch due to lower incomes and others wanting to make the most of savings amid a climate of low-interest rates, financial scams are on the rise.

While many financial scams involve smaller sums of money, fraudsters target larger savings too. Information released by the Financial Conduct Authority (FCA) revealed scammers have successfully accessed more than £30 million from pensions in three years since 2017. Some of these victims lost as much as £500,000. Financial scams can not only have a devastating impact on your financial security but your wellbeing too.

The 5 most common financial scams

We often think we’d be able to spot a scam. But scammers are becoming more sophisticated and when you’re already under pressure it can be easy to overlook the warning signs. The first step to protecting your assets is to understand how scammers operate.

The FCA has identified the top five financial and bank scams as:

1. Boiler room schemes: These types of scams will often start with a call out of the blue. Scammers will typically offer high investment returns and use high-pressure sales tactics to try and push you into quick decisions, such as moving your money to another account.
2. Phishing scams and smishing scams: Phishing scams refer to emails you may receive that appear to be from legitimate sources, such as your bank. They will contain a link which the email will say you need to click on to verify your account, confirm a transaction or something similar. Instead, you’ll unwittingly give them your account details. Smishing scams are similar but the scam begins with a text.
3. Pension liberation schemes: Pensions are usually among our largest source of savings and so present a tempting target to scammers. Unsolicited contact claiming they can help you access your pension early or have high-return investment opportunities should act as red flags.
4. Homebuying fraud: When buying a property, we typically have a lot on our mind and scammers take advantage of this. Homebuying fraud involves a fraudster monitoring emails between a solicitor and a client intending to get you to transfer the sale money to them. As they’ve been monitoring communication, these emails can be convincing and lead to you sending large sums to the wrong account.
5. Freebie scams: A freebie or free trial can be tempting. But if you need to enter your card details you may be signing up for an expensive monthly subscription that can be difficult to get out of. Once you approve this type of billing, payments can occur without any further contact. Of course, many businesses use a free trial model. Before supplying card details, make sure the firm is legitimate and manage payments carefully.

In many cases, if you fall victim to a scam it will be the last time you see your money, so remaining vigilant is important. If you think you’ve fallen victim to a financial scam, contact your bank or provider and Action Fraud, they may be able to stop the release of funds or recover the money.

6 things you can do to protect your money

1. Be wary of all unsolicited contact

While unsolicited communication can be tempting, it’s often the first sign of a scam. If you receive a call, text or email about your finances out of the blue, be cautious. Fraudsters using this tactic will usually be offering high-return investment or saving accounts to tempt you. Phrases such as a ‘free pension review’ or ‘pension unlocking’ are often indicators too. A ban on cold calling about pensions came into effect in 2019.

2. Verify who you’re speaking to

If you don’t recognise the person you’re talking to, take the time to do some due diligence. This should include checking the FCA register, which will show you if a firm or person is authorised. Keep in mind that number spoofing is becoming more common. This is where a criminal will manipulate the caller ID to suggest they are from a legitimate business, such as your bank. If you’re unsure, hang up the phone and call the firm directly on another phone where possible.

3. Don’t make quick decisions

Financial decisions can have a huge impact on your life and goals. Don’t rush into making them. A fraudster will try to push you into making snap decisions, so you don’t have the time to weigh up your options. They may do this by offering time-limited deals or even sending a courier to your house with documents to sign. Always take some time to think about your decisions. A professional will understand this and give you the time and space you need without pressure.

4. Understand your financial assets

Criminals often use a lack of understanding of financial assets to their advantage. For instance, they may suggest complicated investment opportunities or that you can access your pension sooner than possible. By understanding your assets, you’re in a better position to spot those trying to scam you.

5. Ask questions

Financial decisions can have a huge impact on your life, don’t be afraid to ask questions if you need more information or clarification. A scammer may try to brush you off, but a professional will understand why it’s important and be happy to answer questions.

6. Be realistic

High returns can be tempting. After all, you want to get the most out of your money. But if someone is offering low-risk, high-return investments, take a step back and ask if it’s realistic. As the saying goes, if it sounds too good to be true, it probably is.

We’re here to help our clients with their financial plans, and that includes being aware of scams that could pose a threat to you. If you’d like to discuss your assets and how to get the most out of them with your aspirations in mind, please get in touch to arrange a meeting.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.