While protection for scam victims is improving, the startling truth is that most scammers are not caught, and victims lose their money. It can have a devastating impact on your financial security now and in the future.
According to new statistics from Quilter, just 1 in 700 incidents of fraud resulted in a conviction in 2019. The findings also show that the conviction rate is falling. Since 2011, fraud convictions have fallen by 10% on average year-on-year. With many cases of fraud thought to go unreported, the gap could be even larger.
There are many reasons why convictions for fraud are low. It can be difficult to prove, and the cost of investigating is high. However, for victims, it often means they don’t get the justice they deserve or compensation. Being vigilant is important to keep your savings safe.
It can be easy to think you’ll never fall for a scam. But the last year has proven how inventive scammers can be and that they will pray on victims when they’re vulnerable. Taking advantage of pandemic confusion, some fraudsters have been posing as NHS Test and Trace staff to gain access to people’s home and personal details, leading to Action Fraud issuing a warning.
Figures from Action Fraud highlight the huge impact fraud can have on financial security:
- In the first four months of 2021, £1.8 million was lost to pension fraud
- Over £63 million has been lost to social media investment fraud.
Just as worrying is that victims of scams are often targeted again. Fraudsters may pose as someone offering help or even share your details with other scammers. According to data from the National Fraud Intelligence Bureau, over £373 million was lost by repeat victims in 2019/20, with the average victim losing £21,121. For those falling prey to investment fraud, the figure was £84,604.
What protection do scam victims have?
In many cases, victims of a scam cannot get their money back. However, there are some protections in place.
Banks have often refused to provide compensation because, in many cases, the customer has technically authorised the transfer. This applied even when a victim was targeted by a sophisticated scammer, who may have appeared to be calling from the bank or other reputable organisation.
Since 2019, some banks have committed to a code of conduct to refund victims of scams. However, this usually requires customers to take due care when authorising payments, such as checking bank details. As a result, it’s not guaranteed that you’ll receive the amount you’ve lost back even if you use one of these banks.
There is also little protection in place if you transfer money from an investment account or a pension. In most cases, the money is not recoverable. As a result, it’s vital that you take steps to protect your assets and carefully think through any financial decisions you make.
If you’re making financial decisions, here are three things to keep in mind to reduce the chance of falling victim to a scam.
1. Don’t rush into making decisions
If you’re approached with an exciting offer, it can be tempting to jump right in and start benefiting from it. Even more so if the offer has a time limit on it. But you should always take a step back and thoroughly weigh up the pros and cons.
What may seem like a good choice when you first hear about it, can rapidly change when you delve into the details. A fraudster will try to encourage you to make a knee-jerk decision and limit the amount of time you have to think an offer through. Always take a step back to look at the finer details and think about how it’d fit into your overall plan.
2. Always check who you’re speaking too
Scammers may pose as someone genuine and trustworthy to gain your confidence. Some may even appear to be associated with genuine businesses. For instance, through number spoofing, a call may look as though it’s coming from your bank when it’s not. Or a scammer may claim to be from a real financial advice firm.
Don’t take someone’s word for it when they say where they are calling from, especially if the contact is out of the blue. A genuine professional will understand why you’re being cautious. Your first step should be to check the Financial Conduct Authority register. Here, you can find the details of regulated financial firms. You should use contact details here to get in touch with the firm directly.
Those few minutes you spend checking could save you thousands of pounds.
3. Compare the offers to other options
When you look at other options, how does the offer compare? Remember, if it sounds too good to be true, it probably is.
For example, all investments come with some level of risk. An opportunity that claims to provide guaranteed returns or to be low-risk, high-return is likely to be a scam. Or a pension that you can access earlier than usual, currently 55 and rising to 57 in 2028, should set alarm bells ringing.
If you’ve been approached with an opportunity and aren’t sure if it’s a scam, please contact us. We’ll help you understand what your options are and highlight the risks.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Richard Fyfe is a Chartered Financial Planner and a Director of Fyfe Financial.