Life
    Money

    All of us – however financially savvy – are at risk of being scammed

    3 October 2019

    The world, it seems, is full of victims — each of us crying out to be robbed. How else to explain the never-ending scams we’re confronted by every day, from the emails regarding the sad demise of poor old Lt Gen Adegoke Akimbo and his $173 million legacy, to the endless phone calls that begin with a maddening recording of a woman saying: ‘Hello? Yeah, our records show you’ve recently been involved in an accident.’ There but for a few IQ points go you, dear Spectator reader.

    Or so you might believe. Tempting though it is to think of scams as a kind of financial survival of the fittest, relieving society’s stupidest of their moolah, the reality is scams do not just snare dim people. On the contrary, according to the Financial Conduct Authority (FCA), victims of scams tend ‘to be wealthy, financially sophisticated males with an escalating correlation to older ages’.

    Certainly, anecdotal evidence bears this out. Take, for example, the wealthy South Korean businessman who was recently reported to have lost $2.3 million in a cryptocurrency scam. He had survived the rough and tumble of business to make his fortune but that did not protect him when it came to selling his crypto-currency holdings to a pair of Serbians in a hotel in the south of France.

    In a recent report, the FCA analysed the victims of investment fraud by age, sex, wealth and other socio-economic factors. Unsurprisingly, it found that the elderly were especially vulnerable, with the over-75s most likely to be scammed. A little more surprisingly, the risk of being scammed rose steadily with age, with all groups over 55 more likely than average to be the victims of fraud.

    It was a similar story when they analysed victims by income. The group most at risk were those on more than £100,000 a year — intelligent professionals who ought to be able to spot a scam. They were 80 per cent more likely than the general population to fall victim. The FCA also analysed victims by what it described as their ‘financial sophistication’ — i.e. their knowledge of matters relating to money. Oddly enough, the more ‘financially sophisticated’ we are, the higher our chances of being scammed, with the most ‘sophisticated’ 5 per cent more than five times as likely to fall victim as the average Briton. There is perhaps a reason for this: if you are in the habit of investing, you are more likely to respond to someone cold-calling with a deal that seems too good to be true.

    Being the victim of crime in the digital age is nothing if not an equal opportunity experience. As the scams get ever cleverer, we are all but one click from disaster. And scammers’ chances of getting away with it, it appears, are about evens. Last year, according to the Fraud the Facts 2019 report compiled by banking and finance industry body UK Finance, £1.2 billion was stolen through fraud and scams, while the cost of thwarted scams was £1.6 billion.

    The report also revealed just how much fraud is being committed through ‘push payment scams’, whereby a criminal must persuade his or her victim voluntarily to hand the money over. In the UK in 2018 alone, 85,000 such scams were successful.

    Push payment scams are something educated folk seem especially susceptible to. This is perhaps because push payment scammers require their victims to have significant funds lying around in bank accounts. Typically, the scammer will pretend to be a business requiring payment — for example an estate agent, a funeral director, a building firm, a school or even the victim’s bank itself — and, frequently at a time of maximum distraction for the victim (shortly after the death of a loved one, perhaps, or during the early stages of a particularly grim illness), will present what appears to be an urgent invoice by telephone or via email.

    ‘Once the victim has authorised payment and the money arrives in the criminal’s account,’ UK Finance says, ‘the criminal will quickly transfer the money out to numerous other accounts, often abroad, where it is then cashed out. If a customer authorises the payment themselves, current legislation means they have no legal protection to cover them.’

    There are plenty of other scams aimed at well-off people. Take, for example, the ‘romance scam’, whereby last year 1,400 people were fooled into parting with £12.6 million by mendacious apparent paramours. Another scam involves ordering expensive items to your home (using your bank details) and then immediately afterwards knocking on your door disguised as a deliveryman to claim there has been a mix up, and to ask for them back. Good luck getting your money back if you’ve signed.

    For most of us who are scammed, it seems our first phone call is to our bank. We want to know our money is protected and that we will be reimbursed for our misfortune. Perhaps understandably, in recent years banks have been reluctant to make good losses to people who have handed over their entire life savings to criminal gangs. But since May this year, thanks to pressure from consumer group Which?, they are increasingly compelled to. Banks including Barclays, Lloyds, Santander, RBS and HSBC have signed up to a voluntary code that requires them to put more measures in place to prevent bank transfer fraud, and to refund losses for tricked customers.

    Modern life is full of con artists and confidence tricksters. Few of us will go a lifetime without being on the wrong end of a scam. The best advice is the simplest: don’t fall in love with a Filipino sex bot, and trust no one.