Financial scams have become a sophisticated menace, using psychology to bypass the radar of even the most vigilant individuals. According to UK Finance, unauthorised fraud losses from online transactions, stolen credit cards and details, and apps was £1.2 billion in 2022. Many people, with a lifetime of savings and often trusting nature, can be particularly vulnerable to these deceptions.  

These scams are simply more modern versions of ‘cons’ witnessed through the ages, and utilise many of the same techniques that magicians adopt to entertain us; misdirection, time pressure, opportunity, social compliance (authority figures), and social proof (the herd).  

Here are some common scams you may have heard of:

The Classic Boiler Room Scheme

Imagine a scenario where you receive a call from a seemingly reputable broker, promising a once-in-a-lifetime investment opportunity with guaranteed high returns. This is the classic ‘boiler room’ scheme! The pressure is high, the jargon is complex, and the urgency is palpable. But remember, if something sounds too good to be true, it probably is.

The Phishing Trip

Next, we have the infamous phishing scams, where scammers cast a wide net via emails or texts, hoping to catch personal information. They masquerade as your bank, complete with convincing logos and official language, urging you to ‘verify’ your account details or needing your help to assist a child or relative. Some of these are easier to spot than others, so you should always approach any communication asking for even the smallest personal detail with a healthy dose of scepticism.

The Pension Predicament

Pension liberation schemes are where scammers offer to ‘unlock’ your pension funds before the minimum retirement age. They may offer to do so for a ‘small fee’ and will transfer your money to an ‘unmissable’ investment opportunity. Spoiler alert: the only thing that will be liberated is your hard-earned retirement savings; from your pocket into theirs.

The Take Five Campaign: Your Financial Shield

To combat these scams, the Take Five Campaign from UK Finance offers straightforward advice:

1. STOP: Take a moment to stop and think before parting with your money or information. It could keep you safe.

2. CHALLENGE: Even if a request seems legitimate, ask yourself, is there a chance it could be fake? It’s ok to reject, refuse or ignore any requests, especially over the telephone. Only criminals will try to rush or panic you to making a snap decision.

3. PROTECT: If you think you have been scammed, reporting it is crucial, even in the midst of the ordeal. Contact your bank immediately on a number you trust. Report it via Action Fraud’s website or by calling 0300 123 2040. If you are in Scotland, report directly to Police Scotland by calling 101 or Advice Direct Scotland on 0808 164 6000. In the UK, you can forward suspicious emails to report@phishing.gov.uk, and forward text messages to 7726 (it spells SPAM on your keypad!).

For more information, visit Take Five Stop Fraud.

The Art of Not Being Scammed

Prevention is infinitely better than cure, and protecting yourself starts with awareness. Be cautious with sharing personal information, especially in response to unsolicited requests. Set up strong passwords, enable two-factor authentication, and always verify the legitimacy of requests through direct, trusted channels.

As a valued client of Citywide, you know that we will never pressure you to make hasty investment decisions. This is, of course, the exact opposite of our investment philosophy. If you don’t think it is us calling, we won’t be offended if you want to call us back to verify the call is legitimate. We are here to safeguard your financial wellbeing and will do all we can to make you feel secure.

To further increase security and peace of mind with communication of your sensitive documents, over the next year, if you have not enrolled already, we will introduce you to our new portal for securely sharing information. Please call and speak to your team if you would like to be enrolled sooner.

While scams can be daunting, knowledge is power! By staying informed and cautious, and you can navigate financial seas without falling prey to the siren calls of scammers. Remember, when in doubt, take five and stay alive (financially, that is).

For more information you can also visit the National Cyber Security Centre.

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This article is intended for educational purposes only and should not be considered as financial advice. Always consult with a professional financial advisor for guidance tailored to your specific circumstances.