Combat Financial Fraud


financial scamsThe UK’s financial services industry revealed a financial fraud was committed once every 15 seconds in the first half of 2016, and the number of scams are growing.

Over one million cases of card, cheque, phone or online fraud recorded between January and June. It’s too early to judge what that fraud is worth, but in 2015, financial losses from reported scams were £755m – a 26% increase on 2014.

The British Crime Survey data shows fraud and cybercrime accounts for nearly half of all offences. The Police expect the true figure to be higher, as a significant volume of losses go unreported every year.

So if you only read one of our articles this year, this is the one that could save you the most distress, time and money.

Not least, because the UK’s largest banks say they are stopping only £7 of every £10 in potential fraud losses. Millions of pounds are still being lost to fraudsters every week.

We are carrying less cash than we used to, most of the transactions we make day to day are now digital. Being time starved, makes shopping and banking online more convenient, but we must be careful.  Research by comparethemarket.com suggests that more than four in 10 of us have had to cancel our credit or debit cards after falling victim to online fraud in the last year.

Trust Based Financial Fraud

The biggest schemes don’t rely on technology, but good old fashioned deception and abuse of your trust. The most famous of these, is the Ponzi scheme. Not invented by Charles Ponzi, the magnitude of his deception led to the dubious honour of the con being given his name. It works by passing off money from new investors to returns for existing ones while misrepresenting the investment as sustainable.

Charles Ponzi scheme collapsed owing around $20 million in investments in 1920, Bernie Madoff conned $18 billion from investors as recently as 2008, including some institutional investors. Madoff’s scheme is thought to be the largest fraud in US history.

Identity Theft

The internet, the rise in contactless payments, mean it is more important than ever for you to be vigilant when managing your money and your personal details.

The internet and misuse of trust combine to create the most common fraud, identity theft. It happens when fraudsters access enough information about your identity (especially your name, date of birth, current or previous addresses) to obtain goods or services by deception. Remember, they only need a little information; they use your trust to turn into a complete picture of you.

They can do this by opening bank, credit card, loan, mobile phone contracts and even state benefits accounts. They shop online in your name and even taking over your existing accounts. Worse of all, you may not know you have been affected by ID fraud until you get a bill for something you haven’t ordered. You may even start to receive letters from debt collectors for someone else’s debts.

The most famous recent case is when the telecoms utility company TalkTalk’s security was shown to be inadequate and were hacked by criminals. Their biggest breach was in October last year. Nearly 157,000 customers were affected.

Knowing that TalkTalk would have to reveal the breach, the fraudsters called customers they have details for and claim to be contacting you about the hacking. As they know your name, address and account details, they seem genuine. It has emerged more recently that some TalkTalk customer’s maintenance visit records had been hacked in February this year.  These customers received calls from operators claiming to be from TalkTalk with details of engineers’ visits, including their names and what had been discussed.

TalkTalk has admitted to four different breaches of data, two directly from the company itself and two others from partners’ businesses in the UK and India since their first issue in 2012. The Guardian recently reported the calls are still happening now.

Keeping Your Identity Safe

Protecting yourself against identity fraud and minimising a TalkTalk situation affecting you is simple.

fraud victimsNever reveal your full password, login details or PIN numbers to anyone. If your bank were to contact you genuinely, they would never ask for this information.  Your PIN is for you to know and should never be shared.

Passwords are generally asked for by single letters, “tell me the first, third and eight letters of your password,” for example.

If you receive a new PIN or credit card from your financial provider unexpectedly, or if and expected statement and it doesn’t arrive, tell your bank or credit card company. You may have been compromised.

Passwords for use online should be strong. Include numbers, different case letters and a symbol, like ! We know this is a pain, but use different passwords. If they’re all the same, when one password is violated, fraudsters will try all of your other typical logins. This is especially important if you have webmail or social media accounts.

Don’t leave anything with your identity on lying around for others to look at and dispose of important documents by shredding, fraud operators will go through your waste. Equally, take care when doing this virtually, don’t use public Wi-Fi to access sensitive websites or apps such as mobile banking.

Keep your social media profiles private, especially your posts. Don’t accept invitations from strangers so that your content and details are only seen by people you know.

Telephone Scams

Impersonating an organisation is not limited to TalkTalk. Fraudsters pretend to be someone from a bank, the police or a utility provider. Scammers use cheap and easily available technology to mimic the phone number they are impersonating.

Here are four telephone scams that you should hang up on as soon as you are suspicious.

Bank scams

You’re called by your bank and told your account has been frozen, or locked. Their objective is to convince you that your account has been compromised and to transfer your money to a new ‘safe’ account. They’ll ask you to verify your financial information, giving your personal information to the con artists. They’ll clear your bank account quicker than you can.

Investment scams

Share and property scams cold-call investors offering worthless, overpriced or even non-existent assets to invest in. The premise to help you part with your money is to make a quick decision or miss out on the deal. If it sounds too good to be true, it probably is, so hang up.

Almost all financial services firms and individuals must be authorised by the Financial Conduct Authority.

Legitimate firms can confirm their identity and you can check it on the Register. Ask for their ‘firm reference number’ (FRN) and contact details. Always call them back on the switchboard number given on the Register, not the direct line given to you. Some fraudsters have pretended to be legitimate fund managers.

HMRC tax rebate scam

It isn’t unheard of for Her Majesty’s Revenue and Customs to make a mistake, but they don’t call to tell you. If they have identified an error that is in yours or their favour, they will write to you first. They won’t call and ask you for personal and financial information so they can give you your money.

If you think you’ve overpaid your tax contributions – ask your accountant to contact HMRC on your behalf, or do it yourself directly.

Spam messages

You’ve won a competition you didn’t enter or been in an accident you knew nothing about? Ignore them. They’ll ask you to call a certain number that will cost you a small fortune and you won’t realise until you get your bill. Or they’ll direct you to check a website to win a prize that will download malicious software to your phone or computer.

If you have been Scammed

If you think your identity has been stolen, contact your bank or credit card company and the police as soon as possible and let them know the situation.

If you think you have been approached by an unauthorised or fraudulent firm, don’t share any personal details and  contact the Finacial Conduct Authority Consumer Helpline on 0800 111 6768.

Re-Scamming

If you have been a victim of the scammers, they will take advantage of the fact that you may not be thinking straight and that you will want to recover your losses. So you may be contacted by another group offering to help you get some or all of it back.

Your details are likely to have been shared with other fraudsters that specialise in the secondary scam. Here are some the approaches to be wary of

They will reassure you they can recover your original investment in a legitimate way and that they are representing other people like you. They may even say how much they have recovered for others. They just need you to pay a fee to get your original money back.

They can swap your investment for another deal, or buy back the investment you lost money on. You just need to pay a transfer fee or the tax bill before the profits you were promised can be released to you.

Your ultimate fraud defence is listening to your instincts. If it feels wrong, then it is usually is. Stay in control and have the confidence to refuse unusual requests for information.

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