The coronavirus pandemic has seen a rise in the number of financial scams, as unscrupulous scammers look to take advantage of the pandemic. Action Fraud reported a 400% increase in scams linked to the virus during March.
From the beginning of the outbreak up until April 1, there have been 509 reports, with as many as 50 being received daily and total losses among those targeted estimated at £1.6 million.
Of the scams reported, 41% relate to emails requesting donations towards medical preparations and supplies to help the NHS cope with the effects of Covid-19. Other scams claim to come from the government, including texts telling people they have been fined for breaking lockdown rules.
We’re living in strange and worrying times and our concern for the safety and wellbeing of ourselves and our loved ones can leave us vulnerable, increasing the risk of us falling prey to such scams.
So, what should you be looking out for?
Coronavirus scams
The Telegraph reports that the most common scams to emerge during the pandemic are email and text scams, offers of fake goods and services and, pre-lockdown at least, door-to-door salesmen.
Emails or texts might purport to be from the government, confirming you’re due a tax refund made available in partnership with the NHS. They might also claim to be from the World Health Organisation (WHO), offering fake health advice or lists of infected people in your area.
The Chartered Trading Standards Institute (CTSI) also warned of door-to-door salesmen selling fake testing kits and apps.
The Telegraph report goes on to confirm that roughly half of the coronavirus scams that Action fraud saw were related to fake face masks. Whilst anti-fraud group Get Safe Online reported cases of fake coronavirus cures and treatments.
In one incident reported to police, a member of the public spent £15,000 on face masks which never arrived.
Personal finance scams
There has also been a rise in email scams around investment, pensions, and trading, including:
- Investment schemes encouraging people to take advantage of the economic downturn resulting from the coronavirus pandemic
- Emails purporting to be from HM Revenue and Customs offering a tax refund
- Emails from the government, saying that a tax refund has been made available in partnership with the NHS to help deal with the outbreak.
Detective Superintendent Estelle Mathieson, of Greater Manchester Police, speaking to the Telegraph, says: “There is currently a lot of publicity surrounding coronavirus and it has come to our attention that fraudsters are using what is a time of uncertainty for many and exploiting innocent people out of their hard-earned money.
“It is likely that nationally, scams of this type will rise as the virus situation continues.”
Avoiding pension scams
Fraudsters will attempt to scam investors no matter what the market conditions, constantly adapting their approaches, as we have seen here. The short-term volatility the market is currently experiencing means that scammers are keen to capitalise on investors’ concerns.
As the FTSE 100 dropped by 25% in the first quarter of 2020, and with a hit to the economy of up to 35% of GDP being predicted, pension scams are expected to rise.
Common things to look out for if you’re worried you’ve been approached by an individual or company who are trying to scam you include:
- Unsolicited offers, either by email or ‘cold calling’
- Promises of higher returns on pension savings, often using the terms ‘guarantee’, ‘free pension review’, ‘savings advance’ or ‘loophole’
- Time-limited offers that look to rush you into making a decision
- Unusual and high-risk investments which are often overseas and therefore unregulated with no protection.
Always check the Financial Services Register to make sure the company you are dealing with is FCA registered and authorised to provide the services they’re offering and speak to us if you are unsure about the veracity of any offer you receive.
The FCA also provides a ScamSmart service with specific advice on scams related to Covid-19.
According to a recent Retirement Planner report, those investors facing employment uncertainty – who have been furloughed for example – are most likely to be targeted with ‘early access’ pension offers.
The article quotes Tom Selby, senior analyst at AJ Bell, who had said this to say: “While the country hunkers down in the hope of slowing the spread of coronavirus, the economic fallout will inevitably lead to an increase in the number of vulnerable or potentially vulnerable people in the UK.
“In such an environment unscrupulous scammers will already be plotting ways to take advantage during what for many will be a time of serious financial strain.”
Mr Selby added: “Scammers’ tactics are evolving all the time and increasingly we see complex schemes promoted online through social media. This virtual wild west is a natural home for fraudsters, with governments around the world struggling to create meaningful protections for consumers.”
Get in touch
If you’d like to discuss how we can help you to avoid financial scams, get in touch. Please email info@investmentsense.co.uk or call 0115 933 8433.
