Financial scams and how to avoid them
Phone calls, letters, emails and texts from scammers can seem legitimate and convincing so it’s important to be vigilant and keep an eye out for anything suspicious. Become familiar with some of the more common scams listed below. If you think you may have been a victim of a scam, report it immediately to the local financial regulator within your country or lets us know and we can point you in the right direction. Similarly, if someone approaches you and you are not sure whether it is a scam or not, contact us straightaway. If in doubt drop us a line whether it is a blatant scam (since we can let others know) or down to you think you’ve done business with a non-regulated IFA and not sure of your investor protection rights.
Remember the old adage, if it is too good to be true then generally it is! Scammers are going to sell to your most powerful primeval emotion – greed; which has a habit of blocking out rational thought.
‘Phishing’ is where fraudsters send you emails with links to bogus sites or they may ask you to fill in an online form to capture your security information. Other emails trick you into downloading malicious software (malware) that helps fraudsters get hold of your details. The emails look like they are from legitimate organisations and give a plausible story to try to trick you into clicking a link, downloading something or opening an attachment.
Some emails try to trick you into opening attachments which install something known as ‘ransomware’ on your computer. It encrypts all of your files, including music and photos, and the scammer then asks for a ‘ransom’ to release them. Protect your computer and devices with the most up-to-date security software and be wary of opening attachments or links in emails you’re not expecting or are unsure about.
Scam Phone Calls
‘Vishing’ is similar to phishing but involves a phone call from a fraudster, who will come up with a plausible story to try to get you to divulge your information. For example, the fraudster may say they’re from an exciting new company and offer you a refund or a benefit in exchange for details on your personal, your colleague’s or members of your family’s information.
If someone calls asking you to do this, end the call. Always check the call is properly disconnected before calling the Regulator or Police to report it – wait 5 minutes or use a different phone since if the line is still live, they can pretend to be the very people you are trying to report! Beware of calls on your mobile from strange country codes or ones that have no record of a number. This is increasingly difficult with VOIP technology as you know, but scammers will try everything to conceal their tracks to avoid repercussion.
This is when scammers pose as salespeople and contact you offering investment opportunities like exciting shares, plots of land, gold, carbon credits, forestry, deceased estates or wine. These are all legitimate forms of investment but tend to be the favourite subject matter of scammers. The caller will often tell you that the opportunity will be missed if not acted upon quickly. Despite the promise of a high return, the investment turns out to be worthless. If anyone offers you an investment opportunity out of the blue, do some research before you take the plunge. Once you have sent the money to the scammers, it will be bounced around so many accounts that you are likely not to recall it before it is too late.
Pension scams typically involve promises of pension investment opportunities or unsolicited offers to help you release cash from your pension early. With over 55s getting greater access to their UK retirement savings from April 2015, there are more opportunities for investment scammers to convince people to invest their pension pots in unregulated or bogus schemes.
Superannuation, 401k and all other types of pension, will have strict rules about access, commutation and where/what it can invest. Anything claiming you can cash in your pension before the age of 55 is also likely to be a scam, and early pension release may cost you most of the money in your pension fund. Never be rushed into agreeing to a pension transfer or investment decision, and always speak to a qualified financial adviser who is licensed to provide this specialist form of advice.