Beware the dangers of financial scams

You are 20 times more likely to be defrauded than to be robbed

AS a financially savvy person who obviously reads all the right newspaper columns, you do, quite rightly, devote your energies to securing and increasing your wealth – be it through pension saving, saving in an Isa, or investments.

However, I find clients are increasingly having to concern themselves with preserving and protecting their savings from a range of increasingly sophisticated financial scams.

In fact, the Office of National Statistics said lately that fraud is now the most common crime against the public, and you are 20 times more likely to be defrauded than to be robbed.

With regard to your pension, for example, you may be offered, by phone or by mail, a free ‘pensions review'. If you accept, an offer of investment advice, or of early access to your pension, soon follows. However, vulnerable pension savers may not be told of the taxes or fees involved, which can be considerable, and end up with a lot less than they thought they would receive.

You might also be approached with professional-sounding, high pressure offers of fantastic investment opportunities. These are ‘fantastic' in the sense that they are bogus schemes; they exist only in the mind of the conman on the other end of your phone line. Overseas property investments are particularly hazardous, as they can be outside the control of the regulatory bodies in the UK.

These offers deal in larger sums, and are at the ‘top end' of investment scams.

At the lower end, and much more widespread, are online or phoneline approaches to the general public, making attempts to relieve us of the money we have in our bank account.

Phishing is the most common approach, an attempt to get hold of your financial details either by downloading malware to your computer, or by enticing you to fill out a form.

It's big business now: the government's Anti-Phishing Working Group tells us this month that 5,000 new bogus websites are popping up every day.

These are well-designed, slick and convincing enough to fool large numbers of people: nearly a third of us who receive phishing emails click on the link, and one in six enter their details on phishing sites. But you don't have to enter your own details, in order to be attacked: clicking on the link can download a so-called ‘exploit kit', a data-collecting virus, without the need for any form-filling on your part. It may also install a ‘backdoor', a way in that bypasses your computer security and allows a remote computer operator to collect your details over the internet.

Much more common these days are warnings about simple bogus phone calls. These have become very current here in Northern Ireland in recent weeks, thanks to a high-profile con called the ‘HMRC scam'.

A caller claiming to represent the Revenue demands that you immediately pay a fictitious amount of back taxes, and threatens with police arrest, prosecution and imprisonment if the situation is not resolved within 24 hours. The caller is convincing, insistent and aggressive.

The HMRC scam particularly targets elderly people. In one distressing case in the north-west, a widow who was a pensioner paid £4,000 of her life savings to the bogus HMRC bank account she was given.

It is still going on: as recently as Friday, September 8, there was another flurry of bogus HMRC calls targeting elderly people in east Belfast.

HMRC made a statement to say that, while they do on occasion make telephone contact to the public on a number of issues, anyone receiving a call who is suspicious should hang up and contact them to verify that the call was genuine.

There have also been instances of bogus HMRC callers demanding payment of non-existent debt using ‘iTunes' or other gift vouchers – again, HMRC point out that they would never ask for vouchers in payment for taxes due.

There are many more similar scams, and the public are advised to be wary of any telephone call, text, email or letter asking for payment, or requesting personal details in order to release money, to refund fees, pay lottery wins, or supply a holiday or other freebie.

Above all, offers of pension reviews or investment opportunities must be regarded with scepticism. If you make investments without independent financial advice, and get hooked into a dubious scheme, you stand to get badly burnt: average losses for victims of investment scams were £32,000 last year, according to Action Fraud.

Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005 . Further information on Facebook at 'Kennedy Independent Financial Advice Ltd'

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