5 simple and effective ways to protect yourself from financial scams

person using a credit card to buy something online

The latest fraud and scam statistics from UK Finance make for sobering reading. In the first half of 2021, criminals stole more than £107 million through investment fraud and more than £84 million through “impersonation” scams where fraudsters pose as bodies such as banks to convince victims into transferring money.

As criminals become more and more sophisticated, it’s never been more important to be vigilant. Fraudsters are increasingly impersonating banks, financial services companies, and even financial planners as a way of conning people into transferring money.

Of course, as well as the potential financial loss because of fraud, becoming a victim of a scam can also cause significant emotional distress.

To help you stay safe, here are five practical steps you can take.

1. Check you’re dealing with a genuine party

Over recent years, fraudsters have adapted their tactics. After a ban on pension cold-calling came into effect in 2019, savers now often fall foul of bogus websites.

Scammers often operate under a name that is very similar to that of a regulated business. These “clone firms” mimic genuine companies using official-looking documents, real employee names, and even clone telephone numbers to catch out investors. Even if you follow the official advice and attempt to cross-reference company names with the legitimate businesses listed on the FCA Register, you could still be tricked.

All this can make it harder to spot a fraud. So, the key step to take is always to pause, and contact the company involved to make sure anything you’re being asked to do is genuine.

Don’t call someone back on the number they gave you. Find a telephone number from official documents or the firm’s main website, and call them back to check you’re being asked to undertake a legitimate transaction.

2. Reject unexpected offers

Scammers frequently offer “too good to be true” incentives such as free pension reviews, “early access” to your pension savings, or guaranteed returns on investments.

If you’re taken in by an offer like this, you may be tricked into transferring your savings into a bogus scheme. It could result in you losing your life savings.

When it comes to pensions, new rules introduced in late 2021 enable pension trustees and scheme administrators to intervene and raise a “red flag” if there are tell-tale signs of fraud or they see methods frequently used by scammers.

In other circumstances where fraud is suspected, an “amber flag” will pause a transfer until the scheme member can prove they have taken scam specific guidance from the Money and Pensions Service (MaPS).

If you’re contacted out of the blue with an offer that seems too good to be true, it probably is. If you’re tempted, always call us first and we can confirm whether an offer is genuine.

3. Don’t be pressured into making a decision

These days, it’s likely that you bank online or through an app. As it’s never been easier to transfer money at the touch of a button, it can put you more at risk when scammers trick you into using real-time payment schemes to transfer funds.

These payments are irreversible, and it’s often too late for you to cancel the payment once you realise you have been scammed.

If anyone asks you to undertake a transfer quickly, or to send a payment straight away, don’t. If you feel under any pressure to move funds – perhaps because you’re told it’s a “time-limited” offer – always think twice.

4. Don’t forget your business

While scams often target your personal wealth, scammers are increasingly targeting small and medium-sized businesses using a range of impersonation and invoice scams.

So, if you’re a business owner, or a senior director or manager, it’s important to make sure your colleagues also remain vigilant.

Scammers will often try to impersonate a chief executive, senior manager, or supplier to try and convince staff to make an urgent payment or to change the existing bank account details held on file. These scams result in the victim transferring money to a fraudster.

UK Finance report that, in the first six months of 2021, businesses lost £59.2 million to these frauds, an increase of 35% when compared to the same period a year earlier.

Liz Barclay, small business commissioner, says: “Imagine that a supplier emails you, saying that they need urgent payment to new bank details. It would be very easy to get sucked in by an email which looks genuine when you’re in a rush.

“Please, please take nothing at face value and check with anyone you need to pay before responding to texts, emails or calls.”

5. Report anything immediately

In the unfortunate event that you fall victim to fraud, you should always report it. Don’t feel embarrassed or ashamed.

Report what has happened to the police. You should also report it to Action Fraud using their online reporting tool or by calling 0300 123 2040. They also have a 24-hour web chat service.

Get in touch

We can help you to establish whether any pension or investment offer you have received is legitimate. Before committing or transferring any funds, call us first on 01189 876655 and we can confirm any request is genuine.