As the UK continues to grapple with its cost-of-living crisis, scammers are taking advantage of people’s increased financial vulnerability.
In the first half of 2022 alone, criminals stole a total of £609.8 million through scams, according to UK Finance data.
In June last year, Citizens Advice warned that more than three quarters of UK adults had been targeted by a scam in 2022 – a 14% increase compared with 2021.
With day-to-day living costs continuing to rise, scammers are likely to target those who are struggling, with schemes that run the gamut from fake email invoices to pension scams.
Below are five common scams to watch out for in 2023.
Identity theft
Cases of identity theft — when fraudsters use a victim’s name and personal information to access their cash or take out credit in their name — have been on the rise.
Cifas, the fraud prevention service, reported a 34% uptick in cases of identity theft in 2022 compared with the previous year.
In the majority of these cases (86%), victims’ personal details were stolen from online sources.
Mike Haley, chief executive of Cifas, said: “The large majority of fraud and financial crime starts online, and the increasing use of digital technology has led to greater opportunities for criminals to commit fraud.”
According to a recent survey by Nationwide, around 17% of UK adults have had their identity stolen or used fraudulently.
While anyone can fall victim to identity theft, Nationwide found women were half as likely to experience identity theft as men.
This difference may be partly explained by respondents’ attitudes towards social media, with 63% of women saying they protected all their social media accounts, compared with just 50% of men.
Ed Fisher, head of fraud policy at Nationwide, said: “We urge everyone to be vigilant by protecting their details and observing a few basic tips — don’t overshare your information unnecessarily, consider who is following your online activity, and protect your devices and accounts with both security software and strong passwords or codes that are not the same.”
Email invoices and online payments
Email invoice scams remain one of the most common avenues of attack for fraudsters.
According to an August 2022 poll by Nationwide Building Society, 24% of adults have been targeted by an email invoice scam. During these scams, fraudsters intercept real email invoices and tweak payment details so the customer’s money is diverted to them.
Nationwide’s survey, which gathered responses from 3,002 UK adults, also revealed that 35% of people did not know that genuine email invoices could be intercepted in this way. The average victim of these scams lost £8,500.
In the first half of 2022 alone, victims lost around £27.1 million to invoice scams, according to data from UK Finance.
To avoid this type of scam Mr Fisher recommends confirming payment details with the trader you want to pay: “Ring the tradesperson on a number you know is theirs and double check the account details. If anything in the email header looks odd, don’t send the money.”
Online shopping is another increasingly popular avenue for fraudsters. According to Office for National Statistics (ONS) research from September 2022, online consumer and retail fraud is up 57% compared with pre-pandemic levels.
In an online shopping scam, criminals pose as trusted online retailers or legitimate sellers on auctions sites such as eBay.
They lure in customers with extreme deals and discounts to sell counterfeit or non-existent products.
UK Finance found this type of fraud accounted for 56% of all scams reported in the first half of 2022.
Ghost brokers
City of London Police has warned young drivers about the ongoing threat of ‘ghost brokers’ — scammers who sell invalid car insurance policies at unrealistically low prices.
After making a sale, the scammers send their victims fake insurance documents, or take out a real policy but falsify details such as the driver’s age, address, and history to bring down the premium.
Most victims of ghost brokers don’t realise they have been scammed until they need to make a claim on the insurance policy.
Ben Fletcher, director of the Insurance Fraud Bureau (IFB) said: “Young and vulnerable people are constantly being targeted online with fake car insurance deals that are too good to be true, and if they fall for them they’re immediately left out of pocket and face having their car seized by the police for no insurance.
“The cost-of-living crisis means it’s never been more important for people to safeguard their personal finances against fraud.”
Ghost brokers tend to canvass victims via social media or word of mouth, so when you need to take out a car insurance policy, be sure to use a reputable comparison site or broker, or go direct to the provider.
Crash for cash
According to the IFB, so-called ‘crash for cash’ scams — in which scammers deliberately cause collisions in order to make fraudulent insurance claims — have also been spreading.
The most common tactic these scammers use is slamming on the brakes at busy junctions, causing the driver behind to collide with their vehicle.
Tom Hill, detective chief inspector at City of London Police’s Insurance Fraud Enforcement Department, commented: “As we have seen in the past, a rise in cost of living and resulting financial hardships can often drive people to commit fraud. Unfortunately, this means that the public need to be even more alert than usual to fraudsters, like ‘Crash for Cash’ drivers.”
To avoid scams like these, the IFB recommends maintaining a good distance from the vehicle in front whenever you drive, and be on the lookout for erratic drivers.
If you suspect you or someone you know is the victim of a crash for cash scam, you can report it to the IFB.
Pension scams
Savers are also at increased risk of being targeted by scammers in the midst of the cost-of-living crisis, The Pensions Regulator has cautioned.
As rising inflation eats into the value of savings, fraudsters are trying to persuade savers to withdraw a portion of their pension fund, which the scammer promises to reinvest for higher returns.
Tom Selby, head of retirement policy at AJ Bell, said: “Unscrupulous fraudsters will attempt to take advantage of vulnerability through any means possible, from offering ‘early access’ to pensions to pushing dodgy investments promising sky-high, guaranteed returns.
“Offers such as these might be particularly tempting to people experiencing inflation on the brink of double digits.”
To avoid these scams, Mr Selby advises hanging up on anyone who contacts you unprompted to discuss a ‘pension review,’ only dealing with financial advisors who are FCA regulated, and being wary of anyone offering ‘guaranteed’ returns on investments.
It’s important to bear in mind that if you are under 55, it is almost never in your best interest to make a pension withdrawal.
Unless you are too ill to work, have been diagnosed with a terminal illness, or have a ‘protected retirement date’ that stipulates you can retire before age 55, you will be hit with a 55% tax bill on the withdrawal.
Tips for avoiding scams
Virtually anyone can be impacted by a scam. According to research by Outseer, an anti-payment fraud software provider, men and women are equally likely to fall victim, and scams are reported across age ranges.
Those aged 20 to 39 reported the most instances of fraud (around 125,800 cases), while those over 80 reported the fewest (around 13,700 cases). However, those in higher age groups who did report scams tended to lose more money.
Mark Crichton, chief product officer at Outseer, said: “There is no profile of a typical fraud victim — every business and consumer is at risk. And for those working to tackle fraud, it’s unhelpful that there remains a perceived “image” of a victim.”
To avoid being the victim of one of these scams, Citizens Advice suggests looking out for key warning signs:
- An offer seems too good to be true. Scammers lure consumers in with promises of cheap deals or high-returns. If something seems too good to be true, Citizens Advice warns, it probably is.
- Communications don’t appear genuine. It’s common for scammers to impersonate legitimate organisations such as energy companies or government bodies. If in doubt, get in touch with the company directly to check if the communication is from them.
- You are being pressured to act quickly. One tactic scammers use is putting pressure on their victims to act quickly, with promises of limited-time deals, or warnings of negative consequences if action isn’t taken. If you are being asked to transfer money or provide personal details urgently, you may be the target of a scam.
- You are being asked to use an unusual payment method. If an organisation you have dealt with in the past is asking you to pay in a new way — such as transferring money to an account you don’t recognise, or using a new payment link — the request may not be legitimate.
- You have been asked for personal information. If you receive an email or text message asking you for information such as a PIN or password, do not provide your details. Genuine companies will not ask you to send these details over text or email.
If you are ever in doubt that an email or text is legitimate, contact the company the message claims to be from directly. Make sure you get in touch using the organisation’s official channels rather than details provided in the suspicious message.
Jane Parsons, consumer expert at Citizens Advice, says: “With the volume of scams on the rise, it’s important for us all to take steps to safeguard ourselves and others against scams.”
