It’s an unfortunate fact of life that scammers are all around us. In fact, a person is scammed every 15 seconds across the UK*
If they succeed, the consequences can be harrowing.
|Download our 'How to spot a scam guide' to find out more|
We feel it’s vital that you’re fully clued up on this subject, in case you’re ever targeted by a fraudster. So we’ve provided useful information on what to look out for, what to do if you’re ever approached, and how to reduce the risk of identity theft.
What is a financial scam?
A financial scam usually involves a fraudulent company offering illegitimate opportunities that can appear so real that, many people are unaware they’re being conned.
A scammer might contact you over the phone, by letter, email or you may even find a salesman on your doorstep – to offer you attractive investment deals with incredible returns.
But however professional they may seem – with their glossy brochures, impressive websites and slick salesmen – if anyone offers you a deal that seems too-good-to-be-true, it usually is.
Once a scammer has roped you in, sadly, it’s usually impossible to recoup your money. It’s also possible that other fraudsters will contact you – because scam companies often sell the details of people they’ve scammed onto others.
Even more distressing, if you’ve been caught out by a scam, there’s a chance you’ll be contacted by another scammer claiming that they can recover your money, after taking a fee from you.
Signs that should trigger alarm bells
As well as being offered a deal that seems too-good-to-be-true, below are other important signs that could mean you’re being scammed:
Contacting you out of the blue – authorised companies are unlikely to contact you spontaneously, especially to discuss complex investments.
Pressurising you into making quick decisions – this is something else that authorised companies should never do. Should this ever happen, you need to report them to the Financial Conduct Authority.
Allowing access to your pension fund before the age of 55 – this should certainly set alarm bells ringing. No matter what they say to you, except in very limited circumstances, no company can give anyone the right to use their pension before 55.
Cold callers – never respond to a cold call unless you know the company who has contacted you. You should also be wary of anyone:
- Asking for money upfront
- Asking to transfer money quickly or send via courier
- Not allowing you to call the firm back
- Requesting personal/financial details from you
- Encouraging you to withdraw a large sum of money from your savings, investments or pension pot
To protect yourself from personal data theft, you should never send original documents like bank statements, driving licence, passport, birth certificate or utility bills in the post, or email them unsecurely.
It’s also strongly recommended you have a good information security approach to how you store your own personal data. Don’t write down passwords (and use different passwords for different accounts), and securely store documents like your passport, licences, pay slips and bills. For personal data like bank statements, it’s good practice to shred them when you no longer need them.
How to avoid being scammed
- Never be rushed into making a decision. Once you’ve given them your money it’s too late, so it’s always best to go away and think about the deal carefully.
- Check any information you’re unsure of before accepting a deal.
- Never disclose your personal data, including financial details, such as passwords or PINs – as this can leave you open to the risk of identity theft.
- Let them do the talking – don’t give anything away.
If in doubt over whether a financial advisory company is genuine, ask for their FCA register number or visit www.fca.org.uk/register. If you think you’re being scammed, you need to report them immediately through the FCA or the police.
What to do if you’ve already been scammed
- Immediately contact Action Fraud on 0300 123 2040.
- Stop sending your money (providing it’s not too late!)
- If they have your bank details, contact your bank immediately to notify them – they might be able to stop the payment.
- If they have your personal passwords, change them immediately.
- Report the scam to the FCA – call 0800 111 6768, providing as much information as possible about your investment and what has happened.
- Contact us – we take this subject very seriously and like to do all we can to help. Whilst it may be difficult to tell if a company is legitimate or not, we will point you in the right direction to try and find out.
- Beware of ongoing scams – if you’ve been scammed once, it’s likely you’ll be scammed again. This could be related to the original scam or a completely new one.
- Look out for money recovery scams – if you’ve lost money, you may be contacted by someone claiming to be from the police or a government agency, offering to recover the money for you – for a fee. They may also ask you for your bank details to pay the recovered money into, in an attempt to empty your bank account. Neither the police nor a government agency would ever ask for a fee to recover money for you, and this should be reported immediately to the FCA or Action Fraud on the numbers above.
- Arrange a credit report, which can help you find out if your credit score has been impacted and if anyone has taken out credit in your name.
- For more details visit the FCA website
Different types of scams
Share fraud and boiler room scams – where victims are sold overpriced or non-existent shares, usually with the promise of high returns. The fraudsters, posing as sales people, are usually highly trained, provide impressive sounding statistics and promise high returns.
Carbon credits – involves the sale of CERs (Certified Emission Reductions) to individual investors, with the promise of high returns when permits are traded. However, there is no secondary market for CERs, which means investors have found themselves unable to trade the relatively small number of permits they hold, or having to trade them at a loss.
Early pension release scams – allow you access to your pension fund before the age of 55, which is unauthorised by Her Majesty’s Revenue and Customs and any funds released under this kind of scheme will suffer a tax charge of 55% or 70%.
Cloned firms – pretending to be from authorised companies. They typically cold-call investors to promote investment opportunities that are non-tradable, worthless, over-priced or even non-existent, using the name and FCA register number of a real company to appear genuine.
Identity theft - if fraudsters are able to access enough personal data about you, they might be able to impersonate you and steal your identity. Identity fraud could include opening a new account or obtaining new credit cards or loans using your identity, or 'take over' your own existing accounts by impersonating you and changing the address of your account.
*Financial Conduct Authority (FCA), Financial Fraud Action UK