3 increasingly common scams and what you need to know to protect your money

A recent FTAdviser report highlighted a scam that took at least £800,000 from innocent investors, some of who were elderly people who lost a significant proportion of their life savings.

It centred around an organisation called the Global Water Group, which claimed to sell ethically-based investment bonds to support water projects globally between 2017 and 2020. According to FTAdviser, it was later discovered that none of the money had been put into genuine investments.

The scam reminds us that fraudsters continue to use ever-inventive ways to steal money. This is also backed up by data from UK Finance, the organisation that represents UK banks and financial services.

It reveals that, in the first six months of 2021, nearly £754 million was stolen through fraud and scams, a 30% increase on the same period in 2020. It also reveals that three types of scam became more prevalent in the first half of 2021.

Read on to discover what they were, and how you could protect yourself from scammers if they make contact.

Criminals are increasingly using these scams to steal your money

In the first half of 2021, scammers stole the most amount of money using “unauthorised payments”. This is when criminals take money out of your account without your knowledge. This type of crime accounted for more than £398 million being stolen, with attempts to steal a further £736 million.

That said, UK Finance also reported that the following three types of scam became much more common in the first half of 2021.

  1. Impersonation scams

The use of this scam rose a staggering 123% when compared to 2020. In total, criminals stole £129.3 million by sending scam texts and emails posing as delivery companies, the NHS, and government officials.

  1. Investment scams

Investment fraud cost consumers £107.7 million between January and June 2021, an increase of 95%. A key reason was social media adverts offering higher returns on investments.

  1. Authorised push payment (APP)

This is when criminals trick you into paying them money and, in the first half of 2021, fraudsters used this type of scam to steal £355.3 million – a 71% increase on 2020. Purchase fraud was the most common type of APP.

You could protect yourself against these scams

While criminals are becoming increasingly sophisticated and imaginative, there are telltale signs that you may be dealing with scammers trying to steal your money. The following are red flags you should look out for:

Pension liberation schemes

Because of the value of many pension pots, criminals are eager to access them. Typically, they do this by offering “pension liberation” or “pension loan” schemes, which they claim allow you to access your pension before the age of 55.

Always be extremely wary as pension providers only offer this very rarely, for example, if you have a life-limiting illness.

These schemes typically result in substantial costs and a significant tax bill, meaning you may lose the majority of your pension pot. Remember, financial advisers were banned from cold-calling about pensions in 2019, so any call you receive is likely to be a scam.

Fake adverts

According to Which?, search engines are an “easy hunting ground” for criminals who use paid-for adverts and attractive returns to reel their victims in. Carry out diligent checks on any company or product that appears at the top of search results or on a comparison site.

Also, be cautious if an advert offers returns that are slightly higher than standard rates. Fraudsters do this to make their scams look tempting without setting alarm bells off.

Bogus investment companies

Criminals set up companies that imitate genuine investment firms. These bogus firms are typically set up so that criminals can take your money in one of three ways:

  • Offer investments that don’t exist, meaning the fraudsters keep your money.
  • Offer high-risk funds with exceptionally high charges.
  • Offer investments that exist, yet instead, keep your money and don’t invest it.

Criminals even produce information that looks similar to the legitimate company, including address, contact details and FCA number. Always check against the Financial Conduct Authority’s (FCA) warning list and, even if the company isn’t on it, check against the FCA register to ensure legitimacy.

Common telltale signs

Be alert to the following as they could help you spot a scammer.

  • Is the company literature full of grammatical errors and spelling mistakes?
  • Is the contact information vague, and are PO boxes being used?
  • Does the website address look right?
  • Are you being asked for personal information? If so, don’t provide it.
  • Is the person you’re talking to pushy or aggressive?
  • Have you been told a financial product is time-limited or in short supply?
  • Is a sense of urgency being created?

A professional financial planner could help ensure you’re not scammed

The best way to guard against scammers is to speak with a bona fide financial planner. They can confirm the authenticity of any financial product you’re considering and the validity of any company or adviser that’s contacted you.

After being named as one of the UK’s Top 100 financial advice companies in 2021 by New Model Adviser, you can be sure to receive clear and appropriate information that’s right for you. If you would like to discuss this further, please email hello@ardentuk.com or call us on 01904 655 330.

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