Scammers and fraudsters thrive on confusion and instability, so the coronavirus (COVID-19) pandemic and ongoing economic repercussions of Brexit have created opportunities for them to attack businesses, taxpayers and savers. Online scams rose 15-fold last year as criminals exploited national events, according to the National Cyber Security Centre (NCSC).
It is vital that businesses and individuals are on guard against potential scams. Here, we take a look at some of the most common methods used by criminals and highlight the steps necessary to protect against them.
Impersonating the taxman
There has been a significant rise in scam texts, emails and phone calls claiming to be from HMRC. These messages are increasingly sophisticated so it can be difficult to tell the real from the fake.
Self assessment tax return season is always a time to be alert, and the pandemic has given scammers many inviting opportunities to prey on confusion.
Emails mimicking HMRC, with invitations to apply for the Self-employment Income Support Scheme (SEISS) grant, and texts offering refunds or funding because of lockdown are among those in circulation. In the case of the SEISS, it can be even more confusing as HMRC has been contacting some claimants to carry out pre-verification checks. However, if this is the case, HMRC should notify you by letter in advance.
HMRC warns that if a message is unexpected; offers a refund, tax rebate or grant; is threatening; asks for personal information; or tells you to transfer money, it could be a scam.
Sometimes there are tell-tale signs to watch out for, bad grammar and spelling mistakes being two of them. HMRC is not likely to start its emails with a 'hello' or end with a chatty 'thank you for your co-operation'. It will not use WhatsApp or emails to tell you about a tax refund.
Most scams invite you to open an attachment or click on a link. Don't. They are likely to take you to a misleading 'phishing' website in order to get you to enter personal details that can then be exploited, or expose you to malicious software.
Import/export red tape
According to the NCSC, Brexit-themed UK government phishing was low during 2020. However, attempts to clone part of the gov.uk website were identified in December. In addition, the increase in red tape being experienced by importers and exporters this year is expected to create opportunities for scammers.
Devastating pension savers
Pension savers have long been a target of scammers, and losses from pension fraud rose to £1.8 million in the first three months of this year, according to figures from Action Fraud.
Pension scams often include free pension reviews, 'too good to be true' investment opportunities and offers to help release money from your pension, even for under 55s, which is not permitted under the pension freedom rules.
Pension fraud can have a devastating impact, both financially and emotionally, but anyone can fall victim to fraud if they are not careful.
Protecting your pension
Although a ban on cold calling in the UK, including emails and texts, was introduced at the beginning of 2019, the problem continues. Cold calls are a major red flag for scams and unsolicited offers should be ignored or rejected. Cold callers will often offer a free pension review. Professional advice on pensions is not free – a free offer out of the blue is probably a scam.
It is crucial that pension savers know who they are dealing with, so checking the Financial Conduct Authority (FCA) FCA Register is imperative. Dealing with an authorised firm gives access to the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS), which can hold firms to account and give financial protection.
A common scam is to pretend to be a genuine FCA-authorised firm (called a 'clone firm'). The contact details on the FCA Register should always be used, not the details the firm gives out.
Pension savers should never allow themselves to be rushed or pressured into making a decision. They should not be afraid to miss out on an 'amazing deal' because of artificial deadlines, and if promised returns sound too good to be true, they probably are. Impartial information, financial guidance and advice are all key to making a good decision before altering pension arrangements.
Individuals and businesses are potential targets for fraudsters and scammers, so always check before you respond to messages, even if they appear genuine at first sight. If in any doubt about suspicious communications, please do get in touch.