March 28, 2024
You may wonder how you can be so gullible but scammers are adept at parting you with your money. Find out how to spot financial scams and avid them.
We all know that an email claiming how somebody is going to give you millions, or they need to transfer a large sum into your account or a relative you have never heard of has left you millions is a scam.
But scammers know how draw you in. It accounts for over 40% of crime in England and Wales. . According to the Office of National Statistics, it was the most common crime type between April 2022-March 2023, with an estimated 3.5 million incidents of fraud experienced by adults aged 16 and over.
My son was scammed by a call purporting to be from his bank saying unusual purchases had been detected on his account. A few minutes later and he had transferred money from his account into a newly created one. No flags were raised by his bank and they refused to reimburse him until pressurised by a newspaper article.
If you think you are being scammed or want to check if it is a scam contact Action Fraud, the UK’s national fraud and cybercrime reporting centre which can be contacted at www.actionfraud.police.uk or call 0300 123 2040. They’ll tell you if it’s a common fraud and be grateful you’ve let them know.
Investment Scams
More money is lost to investment scams than any other type. These scams can be hard to spot.
Don’t lose your life savings to a money-making opportunity that’s too good to be true.
Scammers use convincing marketing and new technology to make their investment sound too good to miss. They promise you big payouts with little or no risk. They often use pressure tactics to get you to act fast, so they can steal your money.
Warning Signs
Beware of fake news articles or advertisements alleging celebrity endorsements for get-rich-quick schemes.
Exercise caution if an online acquaintance, whether a friend or romantic interest whom you’ve never met face-to-face, begins discussing investment opportunities.
Be wary of emails, websites, or advertisements featuring exaggerated testimonials and promises of substantial returns.
Watch out for high-pressure tactics aimed at pressuring you into making quick decisions to avoid missing out.
If the individual providing investment advice claims they don’t require an Australian Financial Services (AFS) license, proceed with caution.
Be cautious if you’re asked to promote the scheme to friends and family in exchange for commissions.
How to protect yourself
Always stop, think, and check before you act. These scams will often pressure you to act quickly. Don’t let them rush you into a bad decision.
Get independent legal advice, or financial advice from a financial advisor.
Check that the person you are dealing with works for the organisation they say they do, using contact details you found yourself.
Check the address and contact details for the company are correct on public listed directories
Check the company’s share listing on the stock exchange. If the offer to buy the shares is well below the market value shown – it’s a scam. If you are told the shares are being released pre – initial public offering (IPO) be even more cautious
Check when the domain name was registered. A new website for an existing company is a red flag.
Common Investment Scams
Crypto – Scammers use crypto-asset (virtual currency) investments, like Bitcoin or Ether, because they are hard to track.
Crypto is a very high risk and volatile investment. The value can go up or down quickly and there are no guaranteed returns. If you lose your money to a crypto scam, it’s unlikely you will ever get your money back.
Ponzi – Investment scams that use money collected from new investors to pay old investors. There is no real investment.
Fake Initial Public Offerings – An initial public offering (IPO) involves a company raising capital by offering shares to the public for the first time. Scammers impersonate companies, including banks, to promote offers that coincide with legitimate company listings. They don’t have any association with the companies.
Celebrity Endorsement – Scammers use the image, name and personal characteristics of famous people without their permission, to get you to invest. The celebrities’ image is used in two ways. An advert on social media or YouTube or a fake news story that appears to be from a well-known news company. These will typically link to a scam website and are often used to advertise scam crypto investments.
Unexpected Money
Scammers try to convince you that you are owed or entitled to, money or winnings that you did not expect to receive.
The scammer asks you to pay a fee or to give your financial or identity details so you can get the money or winnings. There is no free money, and you will lose more money trying to get it.
Warning Signs
Unexpected emails, letters, texts, or any contact that say you are entitled to money, compensation, or an inheritance.
You are asked to pay money up-front, like taxes or fees to get money or prizes; but you haven’t entered a competition.
A letter or email looks official and asks you for an upfront ‘administration fee’ or tax to receive a refund or rebate.
A court order says you are a beneficiary and asks for your identity information or money to make a claim.
How to protect yourself
Always stop, think, and check before you act. Offers of free money are too good to be true and are likely scams.
Don’t pay a fee to collect winnings or a prize. Legitimate lotteries don’t ask you to do this.
Never share your bank or credit card details or your identity documents to anyone you don’t know or trust. Government departments or trusted companies will never ask you to pay money upfront to claim a grant or rebate.
Check with your bank, a legal service or a trusted friend or family member, to see if an offer is legitimate.
Do an internet search using the names or contact details to check for any references to a scam.
If a friend or family member sends you a message about a prize on social media, check with them outside of social media that they sent it.
Typical Money scams
Inheritance – The scammer pretends to be a lawyer, banker, or foreign official. They will say you have a large inheritance from a distant relative or wealthy person. They will provide fake bank statements, birth certificates and other documents to make it look real.
Rebate – Say you are due a rebate from the government, a bank or trusted organisation. This could include money back for overpaid taxes, bank fees or some sort of compensation.
Travel Prize– Ask you to pay money to claim a ‘reward’ such as a free or discounted holiday in a competition you didn’t enter. Money Transfer – offer you a share in a large sum of money or a payment, if you help them transfer money out of their country.
Threats and Extortion
Speak up and report before handing over money to someone who threatens you.
Scammers pretend to be from an organisation and claim you need to pay money. They may threaten you with arrest, deportation, or even physical harm, if you don’t agree to pay them immediately.
They can also blackmail you by threatening to share naked pictures or videos you have sent them unless you send them money.
They will claim that they have evidence of embarrassing internet activity which they will send to all your contacts.
Don’t be pressured by a threat. Stop and check whether it’s true.
Warning Signs
You receive a call, message or email out of the blue from someone claiming to be from a government department, debt collection agency or trusted company.
They will claim that you owe money and threaten you with legal action or arrest.
The caller will tell you that to fix the matter you will need to pay a fee or fine.
The caller may ask for your personal information, such as your passport details, date of birth or bank information.
The caller may claim the police will come to your door and arrest you if you do not pay the fee or fine straight away.
You are asked to transfer money to an account to ‘keep it safe’ or for ‘further investigation’.
They will ask you to make a bitcoin payment.
How to protect yourself
Don’t be pressured by a threatening caller asking for money. Hang up and don’t respond.
Don’t pay anyone by unusual methods such as by gift or store cards, iTunes vouchers, wire transfers or Bitcoins.
Don’t use any contact details provided by the caller. Verify their identity by calling the relevant organisation directly. Find them through an independent source such as a phone book, past bill or online search.
Do not respond to texts or emails. If you do, the scammers will escalate their intimidation and attempts to get your money.
Common Threat and Extortion Scams
Sextortion – A scammer blackmails you by threatening to share an intimate image of you to get your money. This is a serious crime, and you should report it to the police immediately. Scammers target people through dating sites, social media, and gaming apps. They message you out of the blue claiming they have your private images. Or they pretend to be looking for love, then trick you into sending them nude images or videos of yourself or record you during a live video chat with them.
Once the scammer has an intimate image or video of you, they threaten to share it with your family, friends, or people you know unless you give them money. The scammer will tell you they will delete the image or video if you pay but will keep asking you to pay more money.
Product and Service
Scammers set up fake websites or profiles on actual retailer sites. They then offer products or services at prices that are too good to be true. They also post fake ads and fake reviews.
Always check that you are paying the correct people or businesses when buying or selling products and services online.
Scammers also pose as businesses that you know and trust. Then they send you fake bills or by changing the payee details on an invoice you are expecting.
Warning Signs
A seller offers products at an unbelievably low price. They claim they have amazing benefits or features that sound too good to be true.
An online seller doesn’t have any terms and conditions or privacy policy on their website.
A buyer willing to buy an expensive product you are selling without viewing it in person.
A buyer sending a cheque or payment that is more than the agreed price. Then they ask you to refund the overpaid amount.
Getting an invoice for a product or service you haven’t bought.
The payment to the person or business you think you are paying, doesn’t match the identity of the account holder.
How to protect yourself
Stop and check you are buying from a real store and not a fake website.
Be wary of social media stores that are new and selling products at very low prices.
Check that a website you want to buy from has information about privacy, terms and conditions of use, dispute resolution and contact details, plus a secure payment service like PayPal or credit card.
How to check a website
Type the website and the word scam or review into a search engine and review results carefully
Check the contact page. No contact info is a sign it’s likely a scam.
Check contact information like an address on an online map.
Common Product and Services Scams
Market Place and Classified – Scammers set up accounts as sellers on popular online marketplaces such as Facebook; Gumtree; or eBay. Often the buyers and sellers may be individuals rather than businesses. Scammers will also sell expensive products like cars, boats, or caravans. Always inspect the product before making a payment.
False Billing – Scammers will contact you out of the blue and ask you to pay bills for services or products you haven’t ordered. If you didn’t order, don’t pay. Scammers pretend to be from a business you’ve used and send you an invoice with new payee information. The aim is to get you to redirect a legitimate payment to a scammer. You think you are paying for the products or services you ordered but you will be sending money to a scammer. Check emails from businesses carefully. Sometimes they will add one extra letter or number to the email address to deceive you into thinking you are dealing with the real business.
Rental – Scammers pose as landlords for rental and holiday properties. They will post ads for rental properties that may not exist or that do exist, but they do not own. Scammers will come up with excuses about why you can’t inspect the property and will ask you to pay a bond or rent in advance. Never pay money for a rental property you are not able to inspect.
Pet – Scammers set up fake websites to deceive you to pay money for popular breeds, cute puppies, or other pets. They set up fake profiles on social media and online marketplaces to convince you to buy a pet that doesn’t exist. View the pet in person by visiting the breeder or seller. Request to see the pet in a video call with the breeder
Health & Medical Products – Scammers offer health and medical products and services to deceive you to pay money for products that don’t work and won’t cure you. Some of these products may be dangerous. If you are worried about your health always see a doctor. Never take medical advice from people on social media or online forums. Real pharmacies that trade online will list their full contact details. They will need a doctor’s prescription before they send out any medicine.
Do please tell us if you have been subjected to these scams or any other ones that you know. This will help someone else.
Read about false representation scams
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