July marks Scams Awareness Month – so how can you protect yourself? Citizens Advice in the UK has teamed up with the Chartered Trading Standards Institute to launch the awareness-raising drive to help people avoid falling prey to scams. The guide is also extremely useful for people in Ireland.
The campaign urges people to take three steps to avoid themselves and others being ripped off – get advice, report it and tell others about it.
Citizens Advice analysed 5,000 scams reported to the charity between January and March 2016.
It said the average victim of an investment scam loses £20,000. These frauds may involve fake diamonds, bogus stocks and shares and fine wines that don’t really exist.
In one case seen by Citizens Advice, a man paid £150,000 for diamonds that turned out to be worth a fraction of the cost. Victims are being hooked in to such scams by cold calls, online adverts and fake websites.
The promise of returns that appear very attractive in the low interest rate environment may also make such offers sound particularly tempting.
But as Leon Livermore, chief executive of the Chartered Trading Standards Institute, says, while the criminals’ methods are becoming increasingly more sophisticated, “the advice remains the same, if it looks too good to be true, it probably is”.
People’s hard-saved pension pots may be a particular target – so be very wary of offers of “free” advice on how to increase your investments.
The pension freedoms launched in 2015 give the over-55s much greater choice over how they use their pension pots. But fraudsters will also see these savings pots as a target.
Consumer group Which? has also sounded warnings about pension liberation schemes. These target people under the age of 55 and encourage them to withdraw or transfer their pension savings – often with “exhorbitant” fees involved – the consumer group says.
However, pensions are generally designed to only allow savers access to their money after they turn 55.
Accessing pensions savings before 55, unless in exceptional circumstances such as ill-health, could see consumers losing up to 70% of their pot as a tax penalty, Which? warns.
Alex Neill, director of policy and campaigns at Which? says: “Pension scams are a worrying problem and are costing savers millions of pounds.
“Unfortunately, criminals will always find ways to try to target your money and it’s hard to tell the difference between the genuine and the dodgy online adverts.”
Which? is running a campaign called Safeguard us from Scams, which calls for more to be done to protect consumers from online frauds.
The consumer group says people should ignore cold calls and unsolicited texts about their pension.
It also warns alarm bells should ring with consumers if a firm is using phrases such as “loophole” or “free pension review”.
Which? says you should think twice about using any companies promoting access to your pension or early pension release before you reach 55. It fears that some websites may potentially exploit people’s confusion over the new pension freedoms and don’t explain the huge losses at stake.
Many fraudsters use high-pressure tactics and Which? says you should never rush into agreeing a pension transfer. It suggests that if you’re unsure, consider speaking to a financial adviser who is not associated with the pension deal.
The free Government-backed Pension Wise service is also available to help people aged 50 and over decide how to use their pension pot. As well as your pension pot, fraudsters also see the information you place on social media as a target.
Experts at Cifas, a service that gathers information from financial firms, fear that a lack of awareness about the crime is making it easier for conmen.
Criminals glean personal information from social media and hack into private systems to get people’s personal details and go on to apply for a loan or buy a product in their victim’s name.
To help combat online fraudsters, make sure you have the most up-to-date security software installed, including anti-virus. Some banks offer free security software.
Suspect any unsolicited emails that claim to be from a trusted organisation like your bank or the tax office, and be careful not to click on any links.
And remember that while you may be excited about your summer getaway, posting details of it online may also advertise the fact your home is empty to burglars.