Ever since the creation of currency there have been financial scams involving people fraudulently obtaining money from another individual or organisation.
For example, in 300BC a Greek merchant tried to run a fake insurance scam. More recently, in the 1920s, an Italian businessman named Charles Ponzi ran a scheme that promised big returns for investors. In fact, he was simply recycling money he was given rather than placing any actual investments. His name lives on as shorthand for similar frauds that are still being committed to this day.
More recently, online technology has given scammers a whole new range of opportunities. Now they can target you remotely without having to meet face-to-face or even talk to you on the phone.
Scammers are also using online financial transactions to set up more sophisticated scams targeting the vulnerable and unsuspecting.
In this article – and in the spirit of Halloween – read about some of the most frightening scams, and steps you can take to avoid them.
Scammers could be targeting you right now
The Guardian reports that £1.3 billion was lost to scams in 2021 with individuals and big business being targeted.
Scams involving big corporations tend to be highly sophisticated, and often involve computer hackers spending time trying to penetrate firewalls and other online security processes.
When targeting individuals, scammers can be more opportunistic, but there’s still an element of planning involved. They will try and take advantage of vulnerable people – such as the elderly – or those in situations that may make them more prone to being scammed.
Their aims tend to be twofold:
- Glean enough personal financial information from you so they can target your bank account.
- Sell you something that is either totally inappropriate for your needs, or entirely fraudulent.
4 common financial scams
Here are four of the most common financial scams.
All of them meet one or other of the criteria you’ve read about above. In each case, the scam may not follow the exact method outlined and, instead, may be a variation on the theme.
Remember, scammers will often be practiced in their “art” and ready to react to events as they happen.
1. A bogus call from your bank
Imagine you’re settling down with a glass of wine after a nice meal on a Friday evening. Then you get a phone call from your bank.
The caller has an urgent tone, and confirms they are calling you in an emergency to let you know they’ve had a security breach and that your bank account has been targeted by fraudsters.
Your phone screen shows a familiar number, and they share some of your personal information with you – such as your address or even your account number.
They then tell you that in order to keep your money safe, you need to transfer it to a “safe” account – and they give you the account details.
Do you think you’d see through such a scam?
Think again, because research from Santander confirms that, in those circumstances, half of us would be prepared to transfer money to such an account.
2. Bogus text messages
Scammers are always looking to get personal financial details from you.
One of the easiest ways for them to do this – with minimal interaction – is to get you to fill out a form giving them all your bank details. They’ll then take money from your account or go on an online spending spree with your money.
One of the most common ways to send you a form is by text message. They watch the news and keep an eye out for possible opportunities or make up a believable story they imagine you’ll fall for.
So, you may get a text saying something like:
- “Claim your energy refund from the government”
- “You’ve overpaid tax and are due a refund from HMRC”
- “Your bank overpaid a direct debit in error and need to refund you.”
There’ll be a link on the text message that will take you to a page asking for personal information. This page is likely to look like an actual webpage, so it’s easy to be fooled.
Don’t proceed unless you know 100% that the text message is legitimate and comes from an organisation that you deal with. If in doubt, contact the organisation (using the number you usually call them on) and ask if they sent the message.
3. The short-term investment opportunity
This scam could target you through several different channels – a phone call, an email, or even an online advertisement.
You’ll be offered a short-term investment opportunity that will be “guaranteed” to pay out a big return after a certain period of time.
They’ll then tell you it’s a limited offer and you need to act now.
Scammers always like to rush their victims into making a decision. They know if you are given time to think about it, you’re more likely to realise it’s a con.
In reality, the investment offer either doesn’t exist and your money will go straight into the scammers bank account. Alternatively, it’s a really dodgy investment that will pay the scammer a substantial amount of commission – and you absolutely nothing.
4. Fake emails
These are often described as “phishing” attacks – because they’re hoping to hook a victim.
Much like text message scams, phishing scams aim to get your personal financial information through bogus links and fake web pages.
The email you receive will be designed using the branding of a well-known financial institution such as your bank.
Information and content can vary, but the aim is always to get you to complete personal information that will enable the scammer to access your bank account.
For example, you’ll be asked to update your personal information or make a payment that couldn’t be taken from your account for some reason.
Protecting yourself from scams
Effective protection comes down to awareness. That’s why the first scam you read about will often occur late in the evening when you’re more likely to be tired and easy to manipulate.
With this in mind, the best way to protect yourself is to always be on your guard when you get a call or text about financial issues, or when you’re asked to share your financial details.
Other tips include:
- Slow down and if you’re in any doubt at all about what you’re being offered, or asked for, tell them you need time to think about it.
- Even if you know the person you are giving information to, it’s good practice to take care when sharing financial details online. Split up card information by sending your account number by text and your sort code by email.
- Always remember that if an offer seems too good to be true, it probably is.
- Don’t buy anything from cold-callers, and don’t be afraid to put the phone down if you’re feeling pressured into doing something you don’t want to do.
Publicity is often the enemy of scammers. So, sharing details on social media about how scammers have tried to target you can help protect others.
Get in touch
We’re here to provide information and lend support. We will help you assess opportunities and discuss how they might fit into your wider financial plan. A five-minute chat could help you avoid being scammed.
If you’ve been approached and are worried it may be a scam, please get in touch. Email us at clientenquiries@lebc-group.com or call 0800 055 6585.
Please note
This article is for information only. Please do not act based on anything you might read in this article.
The information contained in this article is based on the opinion of LEBC Group Ltd and does not constitute financial advice. You should seek independent financial advice before embarking on any course of action.