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While the fraud specialists are working hard to combat these problems, it’s up to individuals to be on their guard to look after their hard-earned cash. Scams look and sound legitimate, which is why people are often easily tricked. Here we reveal the five most common scams in the UK today - and how to fight them.
1. Boiler-room schemes
These scams promise investors impressive returns - but deliver nothing apart from a great big loss. More than 5,000 investors lost a combined £1.73bn through boiler-room schemes reported to the Action Fraud crime-prevention centre in 2014.
Victims will receive a telephone call out of the blue and be offered an investment opportunity with sky-high returns of as much as 40%. You will most likely be told that you must act fast, and asked to transfer your money straight away. It’s common for victims to part with tens of thousands of pounds. Boiler rooms are not authorised by the Financial Conduct Authority (FCA). This means that if you hand over your cash, it might be the last you will see of it.
Check the FCA status of any firm you intend to deal with for investments. Call 0800 1116768 or go to www.fca.org.uk/register
The most common scams come from fraudsters posing as someone official, such as your bank or building society. Typically you receive an email or text asking you to click a link and verify log on, account and password details. The communication received is from a fraudster who will be able to read the information you type in, should you fall for their trick.
This information is then used to raid your account. If you lose money this way, you won’t get it back.
Your bank will never ask you to disclose full security and password details so alarm bells should ring. If in doubt, call your bank and ask them if they have tried to contact you.
3. Pension liberation
Scammers are bombarding people aged 55 and over with bogus investment opportunities to try to get hold of their pension savings.
One of the most common scams since the pension freedoms were announced involves alleged investment opportunities abroad.
During three months in 2016 one in three people (35%) aged 55 or over have been targeted by a potential pension scammer. According to Retirement Advantage, the retirement specialist, these consumers have been offered free pensions advice or investment opportunities by phone, text or email.
Low interest rates are tempting people to take extra risks, so they are vulnerable to such fake investments. Fraudsters can approach you by post, email or telephone.
If you’re offered a “must-have” investment or a free pension “review” out of the blue, be wary. Also be concerned if you’re warned that the deal is limited and you must act now. Choosing the right retirement income product is a big decision and shouldn’t be done quickly or under pressure. Consult a registered independent financial adviser. If you think that you may have been made a fraudulent offer contact Action Fraud on 0300 1232040. Or visit the FCA’s Scam Smart site to see if the investment you’ve been offered is on their warning list: http://scamsmart.fca.org.uk/warninglist/
4. Homebuying fraud
This con intercepts cash transferred as a home deposit to a solicitor in the lead up to exchange and completion. It’s all done via the internet where a computer hacker monitors emails sent between a solicitor and client. When a bank transfer is about to be made the fraudster emails the homebuyer pretending to be the solicitor, telling them the details of the law firm’s bank account have changed. The unsuspecting homebuyer sends their cash to the new account, where it is withdrawn by the fraudsters.
If you’re buying a property, watch for any emails about payments, such as a change in bank details at the last minute. Many victims are told that the account is being “audited” and so another one must be used. Ring your solicitor if you’re in any doubt.
5. Freebie scams
Seemingly free trial offers for products are duping consumers out of millions of pounds a year. To get the freebies, you need to enter your card details – although told you won’t be charged for the introductory period. In fact you are often signing up to an expensive monthly subscription that is very difficult to get out of. Once this type of billing is approved – known as “continuous payment authorisation” - up to £100 a month can be taken without any further contact.
Last year Amazon Prime was criticised for charging customers £79 a year for membership to a premium service. The Advertising Standards Authority eventually ruled that Amazon had to withdraw an email it sent to customers offering Prime free for 30 days, saying that it failed to highlight the paid subscription that begins after the trial.
The case prompted the Committee of Advertising Practice to warn that hidden costs associated with trial offers can end up costing consumers a considerable sum of money.
Don’t get carried away with the prospect of freebies. Be careful about handing over card details online. If you can’t see any clear terms and conditions of what happens to your details before you enter them, step away.
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Money Means is a news and information series written by independent financial and consumer journalists and experts. FSCS launched Money Means in 2016 to help give people clear and useful information about personal finance, to increase their understanding and confidence when dealing with money. .