With each passing year, scam artists develop new, more inventive ways to part you from your money.
According to a report in FTAdviser, UK consumers lost a combined total of £170 million to investment scams in 2021, and £60 million in the first six months of 2022. Investment scams and impersonation scams – in which fraudsters impersonate the police, your bank, or a loved one to convince you to send them large sums of money – were the most common types of scams reported.
As these criminals become more sophisticated in their attempts to steal from you, what can you look out for to make sure you don’t fall victim? Read on to discover four warning signs that could help you to spot a scammer before it’s too late.
1. Limited-time offers
Often, if someone is trying to trick you into parting with your money, they’ll employ a series of high-pressure sales tactics that make it difficult for you to think clearly.
Examples include:
- Telling you that the offer will end after a very short time
- Suggesting that others have already benefited from the service or investment
- Pressuring you to make a decision right away, or insisting that they call you back in a short time to complete the sale.
Legitimate investment opportunities offered by reputable firms won’t use these tactics, so if you’re at all unsure, it’s usually safest to end the call. You could also speak to someone you trust, such as your financial planner, who can help you to find out if the opportunity is in fact a scam.
2. “Loopholes” for accessing your pension early
Your pension is a long-term investment, not normally accessible until you reach the age of 55 (rising to 57 from April 2028). There are generally only two reasons why you might be eligible to unlock your pension before the age of 55 without a severe tax charge:
- If you have a terminal illness and have less than a year to live
- If you have a “protected retirement date”, usually reserved for people whose career will end well before the usual retirement age, such as professional athletes. This would need to have been in place prior to November 2021.
If you don’t meet either of these criteria, releasing your pension before the age of 55 can trigger a large tax bill of 55% and wipe out a significant chunk of your hard-earned retirement savings.
Despite this, scammers will sometimes promise to help you access your pension savings early, perhaps mentioning a “loophole” that will allow you to sidestep the tax charge. What’s more, the government has made pension cold-calling illegal, so anyone who contacts you out of the blue about this should be treated with extreme caution.
The most sensible thing to do is consult with a professional you trust before you make any changes to your pension, such as your financial planner.
3. “Unusual” investment offers
Another common type of online scam attempts to lure victims into investing in a fake fund or stock through search engine advertisements or even adverts on social media. Preying on those who are struggling financially or who want to grow their money, they promise higher returns than you might find elsewhere.
Sometimes, these investment scams encourage you to invest in something a little bit unusual, suggesting that their investment is a well-kept secret that can offer a good rate of return. The scammers may set up a legitimate-looking firm, or even clone the details of a regulated firm to make themselves look more convincing.
Before putting your money at risk, it’s important to consult with your financial planner, who will be able to help identify whether the investment opportunity is legitimate or a scam. You can also check the Financial Conduct Authority’s Financial Services Register to see whether the firm you are speaking to is legitimate.
4. Emails that require you to enter personal information
These are also known as “phishing” scams, and are designed to trick you into revealing personal information that the scammer can use to access your accounts.
A clear warning sign is an email asking you to click on a link and enter your personal information on the website. Another giveaway is poor grammar or spelling, or an obscure email address or website link.
Remember that your bank or building society will never ask you to enter personal details through a link like this. If you’re at all unsure whether the email you’ve been sent is legitimate, it’s important to contact your bank on a number that you trust (such as the one written on your debit card) and check with them first.
Get in touch
We’re here to help you grow and protect your wealth for the future. If you’d like to learn more about how we can help you to stay safe from scammers, please get in touch.
You can contact us by email at financial@barwells-wealth.co.uk or by phone on 01273 086 311.
Please note
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.
Investments carry risk. The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
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