We have written many times previously on this subject but sadly, illegal activities by the unscrupulous continue to blight the financial landscape – a problem that seems to have worsened dramatically through lockdown as criminals target the more vulnerable. With a new year and hopefully a new outlook for later in 2021 the industry needs to do all it can to protect clients and consumers from these forms of scams. The best way to do so is to understand the ways in which scams work and I have outlined below some of the latest audacities:
Data from Action Fraud revealed clone fraud victims lost £78m to scammers in 2020, with reports to authorities rocketing during the first national lockdown.
On average people lost in excess of £45,000 to online fraudsters. The data also revealed that reports of cloned firms increased by nearly 39% from April to March last year as scammers took advantage of worries regarding the first Covid-19 lockdown.
As an example, news has shown of scammers who appeared to be acting as a fake St James Place adviser called Richard Thorpe, offering support and guidance relating to bonds and have even set up a fake duplicated website called ‘Bond Compare’. This was reported to the Financial Conduct Authority (FCA) in November 2020 but at the time of writing, the FCA have not acted to shut it down.
An adviser in Hull managed to uncover a Covid-19 vaccine-related fraud. The IFA said that two of his clients came close to losing money after they received texts offering them an opportunity to get the vaccine.
There is the old motto that if something appears too good to be true, then it probably is. Investing in something that seems exotic and mysterious may be tempting in these rather dull and mundane times, but they are generally very high risk. These types of investments (such as overseas properties, renewable energy, forestry or biofuels) often sound credible and like they should be a safe investment. However, even if they are legitimate, once the funds have left the UK, they could be very hard to retrieve with regulation not being as strict elsewhere; in many countries, the money could be used for illicit purposes and nevermore to be seen.
Cold calling is now officially banned for pensions, but the legislation is only enforceable for those calling from the UK or offering UK services. For calls starting abroad, the regulator is somewhat toothless in preventing or prosecuting these scammers. Targeting through cold calling is not new, nor is it isolated to pension funds, but pension funds are one of the largest investments that people will ever accrue, so naturally they are very appealing to scammers. The FCA has identified 30,000 instances of unregulated activity in the last 12 months. The callers won’t automatically be asking to access pensions and pass the funds to them directly; however, they may be trying to engage individuals further by visiting a website or agreeing to take pension advice from them. The cold call will normally just be the start or lead into another more elaborate scam.
The internet is riddled with fraudsters offering wonderful schemes, but they are only trying to trick you out of your money. A growing number of Instagram users have lost money to these fraudsters posting on the social networking service. These get-rich-quick trades come with promises of immediate profits so may seem very attractive. With a lot of young people looking at social media every day, scams like this are now more common. It is easy in the comfort of your own living room to be sucked in wanting to believe it and wanting a new lifestyle, especially these days with young people struggling to get jobs. Increasingly, more people are looking at different and varying ways to make more money.
There are billions of social media accounts and algorithms aren’t clever enough yet, so we can’t rely on computers to sift out the bad stuff. Social media companies have got a raised wall up against them. We would actively advise investors to only deal with financial firms that are authorised by the FCA.
We would encourage social media users to never part with money when they are dealing with somebody they don’t know. Sometimes it’s just a case of doing a simple reality check and a little common-sense research. Who is behind the person or company, are they officially registered, have you looked at on-line testimonials and reviews? Before clicking the ‘go’ button, if you are in any doubt whatsoever, show everything to a close relative or trusted friend for their opinion.