Phone and online scams costing consumers £1billion a year

Posted on: 07 November 2014 by Steve Wanless

Stevel Wanless looks at online scams, internet privacy and the risks to savers when new pension rules arrive in 2015.

online scams

Are we ever alone? It doesn’t look like it. Phone hacking is only part of it. Most public places have close-circuit television (cctv) and many of us seem only too willing to place our lives on general display through Facebook and Instagram.

We are always warned to keep any personal financial information as hidden as possible – never write down the four-digit pin that grants access to your bank account.

Yet our personal behaviour is on view as never before. We already know prospective employers might have second thoughts when seeing the photographic evidence on social networks of bizarre and outrageous antics on holiday or socialising.

It is only going to get more intrusive. Image recognition software now detects brand logos on pictures uploaded to these sites and is being used to source marketing information and target people with advertising.

This software has been created by Ditto Labs; the chief executive David Rose explains the grand plan: “Say that you’re Manchester United. How does Manchester United make a good case for bringing in a new sponsor? They can look at photos of people in Man Utd branded clothing and see what other brands appear.”

Not everyone is happy with the practice. Big Brother Watch, the privacy campaign group, admitted that such scanning was legal – but went far beyond what most people expected.

It does seem strange that a time of heightened security and terrorist alerts that cameras including the new remotely controlled drones, can invade our privacy with very little redress.

The BBC Radio 4’s “File of 4” recently broadcast a programme called “Fraud: The Thin Blue Line” which revealed that the National Fraud Authority (NFA) estimated that the annual loss to the British economy from all frauds was £52 billion!

The most astonishing fact from the radio programme was that credit-card fraud is not included in the Crime Survey figures, which politicians often use to show the falling crime rate.

As well as computers, I-pads and phones are increasingly being used for financial transactions. Unfortunately, this ease of use and access seems to fall straight into the hands of the fraudsters, who are as ingenious as they are calculating.

Independent Financial Advisers (IFAs) can highlight the dangers and the precautions that should be taken. Certainly, if approached regarding a money-making scheme, however authentic and genuine it might appear with back-up documentation, it does no harm to run the venture or proposal by your IFA.

Two heads, especially when one is a financial expert, are certainly more likely to spot a fraud or a scam.

Some scams, like helping a fallen diplomat’s daughter get $28million out of Africa, should be relatively easy to avoid, although there are still victims. Often potential victims are targeted through information the fraudster is able to discover through the internet, whether individual or company based.

Financial Fraud Action UK believes that many of the scams are not new, just updated with technology or trends of the day. The new ones tend to be in response to better detection and policing.

The Financial Conduct Authority (FCA) is taking the situation so seriously that it is launching a publicity campaign to highlight the way the elderly, especially, are “conned”. This is the first time the regulator has used the proceeds of crimes to pay for adverts in the media.

The FCA puts the price of phone and internet scams at £1bn a year. Two thirds of victims are over the age of 56, 20% are over 76 and nearly 70% are men.

Those figures mean there is real concern over the “pension” freedom individuals will have from next April. As well as worries that savers might not get or take specialist advice over pension decisions, many fear those pension pots will also be targeted by the criminals.

Just as worrying as the fraud figures - £36m lost through online banking during January to June this year (a rise of 59%) – is the fact that only 5% of the 19,000 frauds reported every month are solved.

The typical scam starts when a customer is phoned and told there has been a security breach on their debit or credit card. The caller, stressing security, tells the “victim” to call the number on the card to check.

The customer puts the phone down, dials the number and gives his/her card details as part of the normal security process. The problem is the customer is not talking to the bank because the original caller who has stayed on the line and now has much of the information required to get working.

The extent of these financial scams affecting the UK is frightening – and growing.

160,000 is the number of computer viruses sent by crooks every day to infect computers; 26,995 was the number of fake banks and building-society websites reported in 2013; £450m was lost to fraud on bank cards last year; £32m was stolen from cash machines; 14% was the rise in amount (£37m) lost to identity fraud in the past 12 months; 25% of people never ask a cold-caller to prove their identity.

Whether it is because of the impending pension revolution or the increasing crime figures, it seems that the financial authorities and watchdogs are now treating these scams (and stopping or solving them) as high priority.

Many of the victims confess to feeling “stupid” or “silly” for being duped so easily; many never recover, financially or otherwise, as their world is turned upside down.

The FCA advises: “Be on your guard. Scammers are ruthless.  We see very many people every year who have lost substantial sums. Our message is ‘reject cold calls’. If what you’re told sounds too good to be true, it usually is.”

For a free, no obligation initial chat about your individual finances, call us on 0800 0112825, e-mail or take a look at our website

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