8 types of financial scams to be aware of

Posted by JSCFinancial on Tuesday 20th of August 2024.

8 types of financial scams to be aware of

Fraudsters use a variety of approaches to convince you to part with your money. Here are 8 financial scams you should be aware of.

1. Impersonation fraud

Scammers often pretend to be a familiar organisation like your bank, a utility provider or HMRC. They might inform you of a (fake) threat to your account and offer to help move your money to a more secure location, or they might claim that you’ve failed to make a payment and encourage you to settle it immediately.

Fraudsters may also pretend to be an individual you trust, such as a family member in urgent need of money or your financial adviser asking for a downpayment to secure an investment. They’ll try to play on your emotions and get you to act without thinking.

If you’re unsure of a person’s identity, if the contact is unexpected or they’re trying to get you to act quickly, terminate the interaction and contact the genuine person or organisation to check if the situation is real.

2. Social media fraud

Cybercriminals increasingly use social media and other digital platforms to defraud their victims. They can set up convincing social media profiles, apps, websites and marketing materials that make them seem like genuine experts or organisations.

Be wary of anyone who messages you unexpectedly on social media with offers that seem too good to be true, avoid downloading any apps from unofficial platforms, and don’t click on any suspicious links.

3. Romance fraud

Romance scammers target people by feigning romantic interest to gain their trust. These scams almost always start online with fraudsters spending weeks, months or even years pretending to form an attachment to their victim. They use emotive language to flatter or encourage you into transferring money to them, after which they promptly disappear.

Be aware of how much personal information you put online. Your age, relationship status and the photos you post can all indicate to a scammer that you might be vulnerable to romance fraud.

4. Investment scams

Fraudsters may contact you out of the blue with a fake investment opportunity. They might claim to be a genuine financial organisation or expert with seemingly credible marketing materials, or they might impersonate someone you trust like your financial adviser.

Investment scammers may try to distract or confuse you with headline figures or lots of jargon but fail to describe the opportunity in significant detail. Be wary of vague investment offers, especially ones that are time-sensitive or seemingly exclusive.

5. Payment diversion

Scammers may pose as a person or business you’ve been dealing with to request a payment or inform you of a change of bank details. They may create convincing fake email addresses, invoices or web payment platforms and encourage you to transfer money quickly to avoid a penalty.

It’s important to verify that you know who you’re talking to. Stop the interaction and contact the genuine person or organisation to confirm if the situation is true.

6. Courier scams

This occurs when cybercriminals contact you pretending to be a police officer or bank official. They’ll claim to be investigating fraudulent activity at your bank branch or a business like a jeweller, electronics retailer or currency exchange.

They’ll ask you to cooperate by purchasing a high-value item, withdrawing money from your account or foreign currency from an exchange. They’ll then ask you to hand it over to a courier (who’s also a fraudster) for further investigation and promise to return the money or item once they’re finished.

The police or your bank will never ask to verify personal or financial details over the phone. If you’re calling your bank to verify the situation, use the phone number on their website.

7. QR code phishing

This scam, also known as ‘quishing’, involves the use of QR codes to redirect victims to a fraudulent website that downloads malware or asks for sensitive information. Quishing encourages you to use your mobile phone to complete an action because they tend to have weaker anti-phishing measures compared to laptops or desktops.

Never scan a QR code from an unfamiliar source and always review the preview of the QR code’s URL before opening it. Inspect physical QR codes on menus or billboards to see if a genuine one has been covered by a bogus code.

8. Repeat scamming

If you’ve been a victim of fraud there's a greater chance that cybercriminals may try to scam you again. All these scams may be repeated either by the same people who defrauded you the first time or other criminals who have acquired your leaked data.

Victims of investment scams are particularly vulnerable to repeat scamming. Fraudsters may dupe you with an investment scam before returning disguised as an organisation offering to recover your lost funds for a one-time fee.

Contact the police if you think you’ve been the victim of a financial scam. You can also forward suspicious emails to report@phishing.gov.uk and forward suspicious text messages to 7726 for free.

For more information about financial scams visit www.actionfraud.police.uk. If you’re in England or Wales, you can also report fraud or cybercrime to Action Fraud on their website or by calling 0300 123 2040.

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