Financial scams can come in all forms and through all platforms. A financial scam is a cybercrime aimed at stealing your money. In this article, we’ll learn about the 10 most common financial scams, how to identify them, and how to protect yourself from one. ⭐Financial Scams ⭐Personal Finance ⭐Money Management

We often underestimate the divine power of gut feelings. 4 out of the 7 calls that you receive are cold calls from a shady company. Do you ever just assume that there’s a con artist behind the phone line on each of those calls? For what it’s worth, your gut may be telling you something. Focus and listen!

That one mail in your inbox which excites you because it ‘guarantees’ to double your money, is a guaranteed way of losing it all. As per research reports, people who fall prey to the hands of these notorious scammers, are 10% ‘nicer’ than those who straight up tell them to buzz off.

Don’t let your gullibility get the best of you. Watch out for these 10 financial scams that are doing the rounds and save yourself from the wicked!

Attention: Scam Alert!

Scams, nowadays, are becoming more and more polished. Scams look and feel legitimate, which is what makes them tough to recognize. There are a plethora of sophisticated ways in which these immoral scammers try to manipulate and exploit you. The list can go on and on. But we know you’re busy planning your Christmas Calendar, so we’ll keep it short and sweet!

We’ve curated a list of 10 of the most common financial scams to help you and your loved ones stay out of harm’s way:

  • HMRC Scams: HM Revenue and Customs is responsible for the collection of taxes in the UK. The number of HMRC scams tends to spike around this time of the year. Right before January’s tax return deadline, scammers impersonate HMRC representatives and send bogus emails and texts to citizens. In 2018, close to 1 Mn people reported counterfeit contact from the authority. The email that these people received contained the HMRC logo and stated that they were entitled to a tax rebate. On the other hand, some received phone calls from supposed ‘tax inspectors’, asking them to clear huge balances. Some also received emails and calls claiming that the victim’s license has expired. As soon as you see such a mail, tread cautiously. As soon as you click the forged link and enter your personal information and payment details, the game’s over. These links are set up to harvest payment details. So either delete the mail or report it to the concerned authority.
  • Phishing Scams: These are the most common way of cyber-scamming. Scammers purport as a bank or building society officials and send you verification emails. If you click on this link and start populating the data fields, the scammer will get access to it at their end. They can also manipulate you into downloading malicious files on your system. So beware of any unknown attachments enclosed with an email.
  • Boiler Room Investment Scams: Boiler rooms schemes are investment scams that ‘guarantee’ high returns on investment. The average loss incurred by people in boiler room schemes was recorded to be £12000 per case. What sets them apart is the fact that they don’t sell you the monotony of index funds. Rather, they allure you into investing in fancy alternatives like wine, art, forestry, land, carbon credits, etc. What’s more, is that they put you under time pressure to invest a large amount of money. Remember, all that glitters is not gold.
  • Authorized Bank Fraud: In 2018, authorized bank fraud garnered over £350 Mn worth of money for fraudsters. Herein, a fraudster can forge their number to bypass security and urge you to transfer your money to a ‘safe’ account. Alternatively, they can hack into legitimate emails from your legal advisor requesting payment, and amend the account, and sort code. These frauds often occur on Friday afternoons, since scammers get the weekend to launder the money before the victim notices. 
  • Pension Review Scams: A Pension review refers to a review of your current pension scheme. Authorized financial advisors examine your pension scheme and determine it’s current performance. So if pension options are perplexing you, these advisors are your go-to guys. Unfortunately, scammers can use a pension review as a portal of entry into your finances. So don’t pay much heed to any free pension reviewers. Pension cold calling has already been banned by the UK Government. So if you get any calls from someone offering this service, is, fair and square, fraudulent.
  • Home-buying Fraud: This type of fraudulent activity is common in the property sector. The scammer monitors emails exchanged between a solicitor and their client. Now when you, as a client are about to transfer the token amount for a house sale, you will get an email from the scammer purporting to be the solicitor. They’ll claim that the law firm’s account details have changed. The unwitting client sends will now have sent this money to the ‘new’ account, belonging to the fraudster.
  • Contactless Card Skimming: Contactless card scams are relatively low, only 1.1% of overall card scams. Scammers can acquire key card detail from contactless cards. However, contactless card scams require close physical contact with a person. The scammer should be standing very close to you to lift your card details, without you noticing it. The scammer might use mobile card readers to lift these details. So the next time someone sketchy stands a little too close to you, be careful!
  • Debt Settlement Scams: Debt settlement companies might make phony claims that they can renegotiate, settle, or get the terms of your debt amended. Such offers are an utter sham.
  • Foreclosure Relief Scams: Foreclosure relief scams aim at taking your money or property. These scammers make fake promises of saving you from the trouble of a foreclosure.
  • Money Mule Scams: This scam commonly targets students between the ages of 18 and 24, looking for some extra cash to keep up. Herein, the victim allows their bank account to be used for laundering criminal funds. The victim receives a fee at the end of the transaction. This activity has serious legal consequences since it’s explicitly illegal. So don’t be enticed by this ‘easy-money’ option.

How to identify a scam?

The Government and fraud specialists are vigilantly working towards putting an end to cybercrime. But cybercriminals are coming up with innovative and advanced ways of scamming people. There’s a lot that you can do on your part. Here’s how you can identify a scam and put an end to one before it even begins:

  • Random and unsolicited phone calls offering unrealistic services.
  • Bogus emails offering services that are too good to be true.
  • A legitimate company will never ask for your Personal Identification through PIN or passwords.
  • If someone puts you under time pressure, do not indulge. It’s most probably a scam.
  • Trust your intuition. If you don’t remember entering a competition, you simply didn’t.

Protect yourself against these scams

The next step to avoid falling prey to a scam is to protect yourself against them. Use tech to your advantage and avoid these cyber scams to secure your finances:

  • Avoid all unsolicited and random phone calls, text messages, emails, or letters. Even people knocking on your door.
  • Never share your personal information with anyone.
  • Regularly update your antivirus software and remember to clear out your cache and cookies. Do not let a browser save your payment details.
  • Keep strong, tough-to-crack passwords across all platforms. Avoid using personal information such as your date of birth, in your passwords.
  • Don’t make advanced payments for any service until you’re certain of the company’s legitimacy.
  • You can always check the FCA register for any financial companies that you’re dealing with. As long as the company is FCA authorized, you’re in safe hands.
  • For companies other than financial services, check them on the Company House website.
  • Try and avoid making payments or entering passwords on a public WiFi network.
  • Check for an SSL certificate on the websites that you’re visiting.