In 2024, Britons lost £11.4 billion in financial scams.
This amount increases every year as scammers use sophisticated methods to steal from unsuspecting individuals. Even though awareness has increased and better cyber security methods are being implemented, the methods of swindling money have also improved, blurring the line between genuine and fake.
This is especially true when you are in a financial crisis and need immediate monetary assistance – you don’t find the time to look through the fine print! This is where things could go extremely wrong! With fake websites and fraudsters always offering too good-to-be-true solutions, you are swayed into falling prey to their tricks.
Imagine considering getting an emergency loan at the end of the month to pay for an emergency and finding a website offering payday loans at extremely low interest rates. Given your situation, you’d be tempted to explore it more.
What you should instead be looking at are safe payday loans amongst other alternatives. Check if these options are FCA-registered not to mention, offer competitive return rates. Providers associated with this certification are genuine and could help you in your time of need and that makes all the difference.
Let’s discuss some common financial scams plaguing people in the UK. The goal is to be able to make sound decisions, especially when dealing with a financial emergency.
Let’s take a look!
1. Romance Frauds
Scammers took the popular saying, ‘everything is fair in love’, too literally. These scammers are not just robbing you of your savings but are responsible for making you suffer through heartbreak, and have trust issues and anxiety on top of everything else. If you are having a hard time believing us watch The Tinder Swindler, a documentary based on a romance scam on Netflix.
Fraudsters target unsuspecting people on dating apps either using generative AI or fake identities. They’ll appear genuine, loving and interested in you. Sometimes, they’ll appear rich and famous like Simon Leviev inthe Netflix series. Most fake lovers will pretend to stay overseas and avoid meeting you in person. Once they’ve earned your trust, they’ll pretend to be in a tough spot, whether it’s a sick child, parent or even needing money to travel back home, the ruses are aplenty and appear extremely convincing.
Once you transfer the money, be sure it’s gone for good.
Here are a few ways to avoid romance scams:
- Always search for the person you met on a dating app on other social apps like Facebook, Instagram, X or LinkedIn; a quick Google search will also suffice
- While love at first sight is great, be wary of someone who over-commits or appears to be “too smitten” by you
- Don’t meet a date in their apartment or a remote location the first time
2. Loan Scams
As we mentioned before, loan and investment scams have always been popular and will unfortunately continue happening in innovative ways. These fraudsters prey on people’s vulnerabilities and lack of financial understanding. You’ll find many fake websites that look almost genuine. However, on closer inspection, you’ll see that contact details, FCA certification and SSL encryption are missing or conveniently not mentioned. You might notice grammatical errors and poor-quality images. However, you might fail to note these discrepancies if you are in a difficult situation and not in the best state of mind yourself.
These scammers usually target people with bad credit scores or those in debt. You might also be asked to pay an upfront fee to receive a loan with abnormally low interest rates, tempting you into believing these scammers.
Sometimes, these scammers also offer investment options with high return rates and can use AI and deep-fake videos to show you endorsement from public figures. This will make you believe them and you’ll end up investing all your savings and receiving no returns.
Here are a few ways to avoid falling prey to loan scams:
- Before investing or borrowing from online lenders, always check the FCA Register and FCA WatchList
- If you find a company constantly calling or emailing you or pressuring you into taking action, consider it a red flag and be cautious
- Never share personal details on calls or emails
3. Phishing
Phishing has been a popular method of scamming people and obtaining their personal information, like name, phone number and account details. You’ll receive emails or messages from your bank, financial apps, or popular eCommerce platforms, telling you you’ve been logged out of your account or offering you a special discount/offer.
You’ll be tempted to click the link or download the file. You’ll then be redirected to a fake website or spy software can be installed into your device, collecting all your information.
If you ever receive such emails/SMS immediately contact your bank to verify the details. You can also expand the email and check the sender’s details to see if the email is genuine. For example, a genuine email address reads, ‘noreply@bank.com’ while a fake one reads ‘noreplay@1bank.com’.
Sometimes, scammers might even pretend to be your manager, a friend or a distant family member asking for financial assistance.
Here are a few steps to avoid phishing scams:
- Install anti-virus software on your devices
- Keep your browser and phone updated; developers are constantly introducing new security measures to protect users
- Always double-check with your colleague, family or bank regarding any email or SMS that you’ve received
4. Debt Relief Scams
When you are in bad debt and are looking for a debt write-off, you might be contacted by fraudsters pretending to be from genuine debt relief platforms. They’ll pretend to liaison between you and your lender. They’ll assure you that they can help you settle the debt for a lower amount.
When you are in a fix, you’ll be easier to persuade and willingly agree to their terms, i.e., giving a small upfront payment to get a bigger debt write-off.
These fraudsters will cold call you, send emails or visit you at home. Scammers use pressure tactics such as ‘the offer is time-sensitive’ or ‘you might face legal action’. This will prevent you from double-checking and falling prey to their scams. These fraud agencies might even run social media ads targeting people who are bankrupt or in debt.
Here are a few steps to avoid debt-relief scam:
- Always check the FCA register before working with any financial organisation
- Don’t make any upfront payment
- Always work directly with your lender, no matter how difficult the situation is
In Summary…
Financial scams are becoming increasingly common targeting innocent people and robbing them of their hard-earned money. All of us spend decades of our lives saving money and trying to make it. It takes one small mistake to lose it all.
Cybercriminals are constantly upgrading their approaches to lure people into their traps and you need to be extra cautious. Some basic preventive measures to follow include, never using a public wi-fi network to log into your bank account or sharing your details like OTP or account number with strangers. It’s important to follow proper financial planning to avoid landing in debt and becoming victims of loan and debt relief scams.
Always remember to conduct proper research before borrowing money or investing. If you feel something is off, always trust your instincts because it’s better to be overly cautious than risk your financial security.