5 tips on how to avoid financial scams

Financial scams can come in a range of forms and unfortunately we have seen many examples of people losing their money in this way. However there are some actions you can take to help protect yourself, and your loved ones, from being the victim of fraud. Below we list some examples of known scams and tips on how to avoid them.

1. Reputation, reputation, reputation

When making any financial decision, who you choose to advise you should be based on reputation. There are some so called ‘experts’ out there who do not have the experience and qualifications to properly advise you and can unfortunately end up costing you more money.

Reputable firms and individuals such as Carpenter Box Financial Advisers are regulated by an industry body. You can also check that firms are regulated through official records such as the Financial Services Register or Solicitors Register.

Top tip: do your research on who is giving you advice! Make sure they are reputable and have the relevant credentials.

2. Current accounts

There are a lot of scams that target current accounts. The elderly in particular keep a large amount of money in their current account and if a scammer manages to gain access you could see your bank account emptied in one swoop. Although banks may eventually refund you the money, if you keep it in another account you will not encounter the risk in the first place.

Top tip: keep a float of no more than £5,000 in your current account.

Make sure you have readily accessible emergency funds in another account, or in National Savings and Investments. Also pay attention to the Financial Services Compensation Scheme limit of £85,000 where you have a large amount saved with one particular institution.

3. Telephone

During the Coronavirus pandemic we have heard of many clients being contacted via the telephone and these can possibly be scams.

It is possible for fraudsters to purchase numbers which look legitimate. So if you receive a call from someone purporting to be from your bank which you are not expecting, hang up and look up the official number on their website or on your cheque book and phone them back.

Top tip: Don’t ever give payment or bank details out over the telephone if someone calls you demanding money.

You can also use a blocking device such as from the Telephone Preference Service. Consumer body Which? has good guidance on how to put this in to place.

4. New scams on the block

  • Test, track and trace: there are scammers who will pretend to be from the government’s test, track and trace department, telling you have to pay £50 or more for a swab kit. This is a scam as you do not have to pay for this service.
  • Fraudulent payment: someone from your ‘bank’ contacts you to let you know that a fraudulent payment has taken place and will ask you for a code that you have received via email. Do NOT give them the code or they can take any money from your bank.
  • Postcard for competitions: be wary when filling in postcards for competitions at fairs and shows. You do not know if the information you provide will be shared with a third party who can use your details to contact you with scams.
  • Clairvoyance: using details from obituary, fraudsters contact elderly and vulnerable people who have recently lost a love one claiming to be a clairvoyant. They claim that for a small fee that they can contact the deceased person and continue to contact the person for further payments. If you try and stop payments, they can turn nasty and say bad things will happen to you as a consequence.

Top tip: be careful what information you publicly share.

5. Other common scams

  • Holiday: fraudsters email work colleagues, relatives and friends claiming to be you and that you have got into difficulty abroad and just need a few thousand to tide you over. Usually the grammar and spelling is poor.
  • You’ve won a prize: there are many scams that post, email or text you to say you have won some money, gift voucher or valuable item. Fraudsters also claim that you have inherited money from a long lost relative that have passed away in a foreign country and a few thousands pounds is needed to release the larger sum of money.
  • Boiler room scams: fraudsters contact you over the telephone saying to have a “sure-fire” investment opportunity for you which will give you a fantastic return on your money. For the first few months after investing this seems true, however they are just returning some of your own money to encourage you to invest more. But soon as you stop investing you never hear from them again and all your money is gone. Even experienced investors can be defrauded in this way as the fraudsters are very plausible.
  • HMRC scam: someone claiming to be from HMRC contacts you to say that the police are on their way and you are about to be arrested unless you pay a sum of money. You will NEVER be asked for money over the phone by the HMRC and they do not operate in this way. The same applies to the DVLA and other official bodies.

Top tip: you wouldn’t hand money over to someone knocking on your door so be wary of anyone asking for some by other means. When in doubt, don’t pay out!

Bonus tip

Many more people now have several online accounts for social media and other websites which may contain personal information or photos.

Bonus tip: You can create a virtual vault for all your online passwords which beneficiaries and relatives can access when you pass away.

Fraud prevention webinar

Earlier this month, Dementia Friendly Worthing held a webinar which covers these tips in further detail. Ian Macara of Bennett Griffin Solicitors also covers some legal matters.

For further advice on avoiding financial scams or if you are concerned about a vulnerable person who may need assistance with their finances, please get in touch with our team on 01903 534587.