How to spot a scam
Scammers are always coming up with new ways of tricking people, and fears over coronavirus have given them a perfect opportunity. But although the scams vary, there are some things they have in common.
Here are some of the main scams, and tips from the financial regulator, the Financial Conduct Authority (FCA), on how to avoid them:
Be wary of fraudsters who claim they can help you access your pension before 55. If you do, you’ll incur massive tax charges of 55% of your pension pot in addition to the scammers’ fees which could be up to 30% of the value of your pot. In some cases you could lose all of your money. There are only very limited circumstances when you can legitimately access your pension pot before 55, such as if you are in serious ill-health.
Also watch out for offers of free pension reviews which come out of the blue and offers to help you move your money to a safe haven. Your money will be invested in high-risk and unregulated investments or will disappear altogether.
Pension cold calls are illegal so if you get one, just hang up – it’s a sure sign that it’s a scam. Ignore any offers you get via email, text or online adverts too.
Before making any changes to your pension, check that any firm you deal with appears on the FCA's Register. Then call the FCA’s Consumer Helpline on 0800 111 6768 to check the firm is allowed to give pension advice.
Advance loan fee fraud
This scam involves being asked for an upfront fee in order to get accepted for a loan. The fee can be between £25 and £450 and you may be asked to pay it by bank transfer, Western Union or even iTunes vouchers. No matter how much you pay, the loan never materialises.
Warning signs to look for include being contacted by text or email out of the blue, or being put under pressure to pay the fee quickly. You can protect yourself by checking that the firm that asks for an upfront payment is authorised by the FCA. Simply type the firm’s name into the FCA’s Register.
Good cause scams
Criminals have also been targeting people with a number of scam emails asking for donations to good causes. For example, one convincing-looking email pretends to be from the government, and asks for money for the NHS. Others appear to come from an organisation that claims donations will go towards the production of hand sanitiser or protective equipment for the NHS.
To avoid being scammed, don’t download attachments or click on links in emails unless you’re sure who sent them. Even if the email is from an organisation you know, if the email itself is unexpected or asks you to click on a link, it could be a scam. That’s especially true if it asks for personal or financial information. Your bank will never ask you for personal information in an email.
You can reduce the risk of being scammed by only donating to legitimate charities. You can search for a registered charity in England and Wales on the Gov.uk website charity register. If you’re in Scotland, check the Scottish Charity Regulator’s website. In Northern Ireland, it’s the Charity Commission for Northern Ireland.
NHS Test and Trace scams
There have been reports of scammers claiming to be from the NHS Test and Trace Service. They send a message or phone you to say you’ve been in contact with someone who has tested positive for coronavirus and that you need to self-isolate and take a test. They then ask you to provide your bank card details and tell you this is necessary so they can take payment for the cost of the testing kit.
Genuine tracers from the NHS Test and Trace Service may contact you by phone, email or text but they will never ask for payment for the testing kit or for your bank details.
If you receive a call where they ask for payment, report it to Action Fraud. by calling 0300 123 2040 or by visiting its website. If you’re in Scotland report it directly to Police Scotland by calling 101.
Also be careful of any links in messages you receive to the contact tracing service website. Action Fraud advises you to type the web address (http://contact-tracing.phe.gov.uk) directly into your browser rather than clicking on any link provided in the message.
Universal Credit scams
Fraudsters have been targeting people who receive Universal Credit by claiming to offer government loans and grants linked to the benefit. Their aim is to steal your personal or bank details.
Remember that the government will never ask for personal or bank details over text or email so if you receive something like this, the best advice is to ignore it.
Number spoofing scams
Number spoofing is where a scammer sends a text message that looks like it’s come from a genuine organisation, such as the government, HM Revenue and Customs or your bank. These scams are very hard to spot especially as the messages will sometimes appear in a chain of otherwise genuine text messages. The best advice is not to click on any link in a text that appears to come from a legitimate source. HMRC doesn’t issue tax rebates by text, and banks don’t ask for personal information this way.
Clone firm scams
This is where scammers pretend to be from an FCA-authorised firm to try and convince you they are genuine. A firm needs to be authorised by the Financial Conduct Authority to sell, promote or advise on the sale of shares or investments (including pensions) in the UK.
These fraudsters set up websites that use names similar to those of legitimate firms, and typically cold-call you to promote worthless or non-existent shares, property or investment opportunities.
Protect yourself by checking the FCA register to see if the firm is authorised. Always access the FCA’s Register directly from register.fca.org.uk rather than from any links sent to you by the firm itself.
The FCA also recommends using the switchboard number given on the FCA Register to call the firm back rather than the one the firm gives you. If the firm claims the number on the register is out of date, contact the FCA’s Consumer Helpline on 0800 111 6768.
There’s been a sharp increase in the number of people visiting the websites of debt advice charities since the government introduced coronavirus measures, and scammers are taking advantage of this. They are advertising websites that offer debt advice. These sites have very similar names to the genuine services and charities. They’re not illegal, but you could end up paying for debt advice that you could get for free. And you may end up sharing your personal details with a company you don’t know anything about.
If you’re visiting a website to get debt advice, always check the website address to make sure you’re not clicking on a ‘lookalike’ site by mistake.
Cold call and doorstep scams
Not all scams are online or over the phone. Some people have reported that scammers have been going door-to-door offering ‘coronavirus tests’ with some posing as NHS contact tracers. To avoid being scammed, ask to see the identity badge of anyone who comes to your door and claims to be from a company or organisation.
If you’re not 100% comfortable, don’t let them in, and don’t give away financial information (such as your bank account details) either.
Other scam warning signs
The FCA is also warning that scammers could use any of the following tactics during the coronavirus pandemic. The fraudsters may:
- play on worries you have about your investments falling in value and advise you to invest or transfer your investments into investments they recommend.
- contact you claiming to be from a claims management company, insurance company or your credit card provider. They’ll tell you they can help you make a claim for the cost of a holiday or a cancelled event and will ask you send them some money or your bank details.
- send you messages telling you your bank is in trouble due to the coronavirus and to transfer money to a new (bogus) bank account.
Action Fraud, which is the organisation to report fraud to, is warning about fraudsters who claim to be able to give you a list of people affected by coronavirus in your area. To access the information you have to click on a link (which will then steal your personal details) or provide an upfront payment. It has also seen examples of fraudsters writing articles about coronavirus with links to a fake company website where you’re encouraged to subscribe to daily updates.
Help from Royal London
Royal London will never cold call you and ask for personal details or try to get you to make alterations to your policy.
If you’re contacted in this way, please do not provide any personal or banking information, end the call and contact us on our main customer service number if you have concerns.
If you have already provided information and you’re worried it might be a scam, please alert your bank and contact Action Fraud.
You can listen to our scams podcast, with information on some of the main scams and tips from our financial crime team on how to avoid them .
Financial scams come in many forms and are increasing rapidly. Royal London shows you how to spot and deal with scams.
Are you familiar with the different types of financial scams?
Take our quiz below to find out.
Avoiding scams Pensions & Retirement