A guide to financial fraud

What is financial fraud?

Financial fraud is when someone takes money or other financial assets from you by deceiving you or stealing your personal details.

Criminals use a variety of ways to do this, including text messages, emails, and social media. But they can also trick you over the phone, or in person - which could happen on the street or on your doorstep.

The impact of fraud can be devastating, from unaffordable personal losses to causing companies to go out of business.

Types of scams to watch out for

With our increased dependency on digital technology, criminals are using more creative ways to access your finances, and their scams are becoming harder to detect.

For example, you could be targeted through:

Identity theft fraud

This is when your personal details are stolen and used to access your accounts or open up new ones to borrow credit in your name

Loan fraud

This type of fraud can happen in several ways. For example, loan fee fraud is when you’re asked to pay an upfront fee for a loan or credit that you’ll never receive. Before you pay an advance fee, always check the company is on the Financial Conduct Authority’s Financial Services Register.

Loan repayment fraud is when scammers target people who’ve taken out loans. They pretend to be the lender by using official-looking emails and letters, claiming you’ve missed a repayment deadline and charging you the repayment plus a penalty charge

Authorised push payment fraud

Fraudsters trick you into transferring money to them by pretending to be a company you’re already using. They may claim they’re from your bank’s fraud team, telling you your account’s been compromised and helping you to move the money into a new ‘safe’ account

Card fraud

There are a number of ways criminals can use credit cards for fraudulent activity, these include:

• Card ID theft - Your credit card details are stolen and used to either make payments or they’re sold on to other fraudsters
• Card non-receipt fraud - This is when a card provider sends you a credit card and it’s intercepted and stolen before it reaches you
• Card cloning or skimming - Your card details are stolen, sometimes through skimming devices fitted over card slots, and used to create a duplicate card which is used to steal from your bank account or borrow in your name
• Use of lost and stolen cards - If it ends up in the wrong hands, your card can be used for making online purchases and in any shops using contactless payment technology. So it’s important to cancel your card as soon as you realise it’s missing

Phishing and smishing

Fraudsters often use convincing-looking emails (phishing) and SMS text messages (smishing) that appear to be from legitimate sources to trick you into clicking a link or calling a number to verify your details

Phone scams or vishing

This is a type of cybercrime that uses bogus phone calls made over the internet to steal your personal information and account details. Callers might convince you that they’re calling from a trusted source like your bank or internet provider

Social media scams

Scammers can make adverts or posts appear genuine by using official brand logos and made up T&Cs. They often appear as special offers or contests, tricking you into entering your personal and financial information

Investment scams

These attempt to con people out of their life savings. Cold-calling is often used, backed up by convincing websites and marketing materials with testimonials to persuade you to invest your money. So always seek regulated financial advice before investing in any products

Romance fraud

Online dating can be used by scammers to gain people’s trust and trick them into handing over money or personal details, often using an emotional or hard luck story

Scam websites

Fraudsters create fake websites that look similar to well-known brands or are intentionally designed to look like government websites - for example, one that helps you renew your passport - to convince you to make a payment.

Malware

You may be tricked into clicking on a link or attachment or installing a program. When this happens, a virus installs itself on your computer and uses malicious code to do things like scan for personal information or capture keystrokes without you knowing

What to do if you’re a victim of financial fraud?

If money’s been taken from your bank account or card, or your personal details have been stolen, there are a few things you should do.

The first step is to contact your bank or card provider so they can cancel any cards and put a freeze on your account.

The bank or lender will usually refund the money you’ve had stolen - unless they find you were careless with your card or bank details.

If a scammer has hacked into your accounts, you should change your passwords immediately, update your security software and scan your computer. Then let your bank know your financial information may have been stolen.

Report the scam to the police through Action Fraud on 0300 123 2040 or by using the website.

Steps to help prevent becoming a victim of fraud

Simple things can make a big difference in preventing someone from accessing your money and details:

• Update your antivirus software - Computers and devices are regularly threatened by new viruses, so software updates can help combat these and protect your computer
• Check unexpected charges - Always check directly with the lender before you pay any unexpected fees, like a late payment charge
• Think before you click - Only click on links if you know and trust the sender, the same goes for downloading any files
• Keep your PIN to yourself - Don’t write your PIN down, store it in your phone or disguise it as a phone number in your wallet.
• Check your statements - Check your bank and credit card statements regularly to make sure there isn’t any unrecognised activity on your account.
• Look at your credit rating - Fraudulent activity can affect your credit score, so aim to check your credit report at least once a year for any unexpected issues or incorrect information
• Be suspicious of cold callers - Anyone trying to sell you something or discuss your account when you haven’t asked them to contact you is dubious. If in doubt, end the conversation and contact the provider directly
• Don’t pay for products by bank transfer - Reputable retailers will have proper online payment facilities, so being asked to do a bank transfer is a red flag

Helpful sources

If you want more advice about financial fraud or have been scammed, there are organisations that can help.

Any lender that you’re thinking of borrowing money from can be checked against the FCA’s financial register - always do this before you make any payments or provide any details.

You can report a scam or an attempted scam to ActionFraud, the fraud and cybercrime reporting centre for the UK. It gathers and passes on information to the National Fraud Intelligence Bureau.

For help and advice about scams, you can visit the Citizens Advice website or speak to one of its Scams Action advisers by calling 0808 250 5050.

If you’ve visited a website you think is suspicious, you can report it through the National Cyber Security Centre (NCSC) website and they’ll investigate. And you can report scam texts and mobile calls by copying the number and texting it for free to 7726.