Common financial scams to be aware of.

Scams Awareness Week will be taking place between 21-27 October 2024. Research from WEALTH at work found that 12% of UK adults have admitted to losing money to a financial scam in the last year. This could potentially equate to 6.2 million adults [1] across the UK.

The research found that of those who had lost money to a financial scam, the average amount was over £1k [2].

These findings come despite almost 3 out of 4 (72%) of adults saying that they are confident in their ability to identify a financial scam.

The research also revealed the worrying impact losing money to a financial scam had on people. It found that two out of five (40%) find it difficult to trust that any financial information is legitimate, more than a quarter (27%) say it’s had a negative impact on their mental health, and almost a quarter (24%) do not feel safe investing their money. Losing money to financial scams has also meant that more than a fifth (22%) have had to change their plans for the future.

It seems that scammers are using multiple methods to hoodwink people out of their money, as the research found that more than a third (34%) of those who had lost money to a scam in the last year had done so to two or more types of scams. To help individuals avoid falling for a financial scam, WEALTH at work has identified the common financial scams that people lost money to in the last year:

  1. Purchase scam – 27% of those who lost money to a financial scam said it was through the sale of fake products or goods online.
  2. Investment scam – 19% said it was through scams that encourage investing in fake opportunities or pyramid schemes.
  3. Friends or family scam – 18% said it was through messages sent claiming to be someone they knew asking for money.
  4. Bank account scam – 18% said it was through fake claims that their account had been compromised.
  5. Tech support scam – 15% said it was through fake technical support services that were used to obtain personal details.
  6. Befriending/romance scam – 14% said it was through scams where someone becomes your friend, then asks for money.
  7. Pensions scam – 13% said it was through fake promises of guaranteed returns or early access to their pension.
  8. Tax refund scam – 10% said it was through fake promises of tax rebates.
  9. Lottery scam – 9% said it was through fake claims that they’ve won a prize

Jonathan Watts-Lay, Director, WEALTH at work, comments; “Financial scamming is rife and it’s shocking that many people have lost money not just once, but multiple times to scams. People need to be on their guard as fraudsters use many convincing techniques to persuade their victims that they are genuine. Many of these scams look completely legitimate and are not easy to spot. People often get seduced by the promise of investment returns which are too good to be true.”

He adds; “Those that run scams are clever and may have been able to get hold of personal details. They often have very professional looking websites and literature which makes it hard to distinguish from the real thing. They will also use technology and try to contact individuals through various means such as social media, texts, telephone calls and emails. If someone is planning to transfer any money or make a payment, but they are not 100% sure that they are doing the right thing, they should stop and think to give themselves time to check it out. If they are feeling harassed, they should hang up the phone or delete the message. Phone companies should be able to help by blocking any offending numbers, and email providers can help block emails from specific senders. People should be aware of what they share through social media and check that their privacy settings are as secure as possible.”

Watts-Lay explains; “Unfortunately, the current strain on household finances could mean that some people are more vulnerable than ever and fraudsters can take advantage of this. Those approaching retirement could also be a key target as they could have access to relatively large sums of money. I urge everyone to never rush to make a decision when it comes to their money as anything that talks about time limited offers is likely to be a scam.”

He adds; “We would encourage people to follow the 3 step approach of the national ‘Take Five’ campaign by UK Finance, a leading industry body for financial services in the UK.  The campaign urges individuals to stop and think before parting with money, challenge if something is fake, and protect their money by contacting their bank if they think they’ve fallen for a scam.”

Watts-Lay comments; “Before investing any money, people should check that the company is registered, with the Financial Conduct Authority (FCA) first, as if they’re not, it’s probably a scam. The FCA’s financial register can be found here. The FCA’s ScamSmart website also includes a warning list of companies to be aware of. If anyone thinks that they are being scammed, they must report it on the FCA’s ScamSmart website. Not only may they be able to help them, but they will be able to help others from falling for the same scam.”

He adds; “Many leading employers offer financial education, guidance and access to investment advice to help people understand the warning signs when it comes to a scam so that it can be avoided. Employers play an important role in supporting the financial wellbeing of their employees and helping them to protect their money from scams throughout their career and at retirement is key. As well as this, many employers also provide employees with access to trusted savings and investment vehicles such as a Workplace ISAs or Share Plan, so the fear of being scammed should never be a barrier to saving for the future.”

[1] 12% (11.6448326055313%) of people lost money to a scam multiplied by the UK adult population of 53,646,829 (ONS 2022 18+ mid year estimate) = 6,247,083 adults across the UK (rounded to 6.2 million).

[2] The research found that the mean figure of UK adults who lost money to a scam was £1111.21 which has been rounded to over £1k.

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