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How to avoid financial scams

Financial fraud cost investors millions of pounds a year. We look at some of the warning signs to watch out for and how you can prevent yourself from falling victim to scams.

The value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek independent advice.

What you’ll learn:

  • How much financial fraud costs the UK.
  • What some of the most common forms of financial fraud are.
  • What you should do if you think you’re a victim of financial fraud.

Financial fraud cost the UK £2m every day in 2016, according to Financial Fraud Action UK, the organisation responsible for leading the collective fight against fraud in the UK payments industry. Total losses from financial fraud were £768.8m that year, up from £755m in 2015.

Here, we explore some of the ways fraudsters attempt to part you from your cash, and explain what steps you can take to protect yourself.

Find out how Barclays helps to keep your money safe

Common types of scam

Boiler room scams

You’ll be called out of the blue and told about an investment opportunity that you can’t afford to miss. Fraudsters may have found your name on shareholder registers of listed companies, which are publicly available. Often firms running this type of scam operate from overseas, but will have a UK business address to convince you they are legitimate.

You will usually be asked to invest in shares in a company you’ve never heard of, but fraudsters also push other investments such as diamonds, carbon credits or plots of land abroad. The salesman promises exceptional returns, which they claim are “guaranteed”.

You’ll often be pressurised into making a quick decision, but once you hand over the money, you’ll usually never hear from the person who sold you the supposed investment again. If you do, they’ll typically be asking you to invest more money.

Advance fee and lottery scams

With this type of scam, you’re asked to make a payment and in return are promised a much larger sum of money or a lottery win, despite the fact you never entered one.

The payment is supposedly to cover administrative or transfer costs, but once it’s made, the promised sum never materialises.

Phishing

Phishing occurs when someone tries to get hold of your personal information by sending out e-mails usually containing a link to a bogus website. Any information you submit via these websites can then be used by fraudsters.

Sometimes fraudsters will also attempt to get information from you by contacting you by telephone. This is known as Vishing, as they are using their voice to extract information. Alternatively, they may contact you by SMS text message, known as Smishing. For example, you may be sent a text with a bogus link in it, or be asked to reply with personal information to a fraudulent number.

Courier scam

You’ll receive a call from someone pretending to be from your bank or the police. They’ll tell you they’ve spotted some suspicious activity on your account, or tell you that your card needs to be replaced. They’ll convince you that they’re genuine by asking you to call back on the bank or police’s real number. However, they’ll stay on the line, so you’re still speaking to them.

You’ll then be asked for your PIN or details of your accounts. Once you’ve given these, they’ll send a courier to pick up your card, which they’ll be able to use because they’ve now got all the necessary personal information they need.

Find out more about financial scams

How to protect yourself

There are several steps you can take to protect yourself from financial scams. Follow these seven golden rules to help you stay safe:

  1. Do not disclose your debit card personal identification number (PIN), your full telephone banking passcode or full online banking membership number/login details. You will never be asked for these by your bank
  2. Don’t be pushed into making any hasty decisions. Always take your time and remember that legitimate organisations shouldn’t push into anything
  3. If in doubt that a company contacting you is genuine, contact them directly to check whether or not they have been in touch with you
  4. If something looks too good to be true it usually is, so steer clear of any investment promising unrealistic returns
  5. Always shred bills, bank statements and other documents containing your personal details before disposing of them
  6. Regularly check your bank statements for any unusual activity. If there is a transaction you don’t recognise, contact your bank immediately
  7. Your bank and the police will never collect your bank card and will never ask for your PIN, so never hand these over to anyone.

Find out more about how to protect yourself from fraud

What to do if you think you’re the victim of financial fraud

Notify your bank immediately if you have handed over your account details.

Report the fraud to Action Fraud, which is the UK’s national fraud reporting centre, on 0300 123 2040, or you can report fraud online at Action Fraud.

You should let the Financial Conduct Authority know via its Consumer Helpline on 0800 111 6768, or you can report it online at FCA.

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