Avoiding financial scams

Peter McGahan

Monday 7th June, 2021

Financial scams leave victims scarred for life. As well as the financial loss, victims feel stupid, and often hide their mistakes.

Don’t. These people are very clever and only by reporting every scam, can we pull the net around them and close down the possibilities of more people being impacted. Contact the police immediately, and citizens advice online who will guide you through the reporting methods on their Scams Action Service.

UK bank fraud hit a new record of over £479m exacerbated by lockdown, where heightened emotion paves the way for easy mistakes. Psychologists show how easily we lose rationality when we are in heightened states of emotion, and that is the strategy used by many fraudsters.

The science they exploit: Behind your forehead is the brain’s executive control centre. That prefrontal cortex is responsible for our ability to inhibit inappropriate impulses. In stressful/excitable conditions, links between the prefrontal neurons are disconnected, weakening the ability to deal with emotions and think straight. Subsequently, primal impulses go unchecked and we can then make horrendous choices.

Furthermore, in a heightened state we become highly malleable and suggestible.

Witness how easy, whilst in these states, ‘social’ media divides opinion and society.

During lockdown, many have become vulnerable as their human emotional needs are not met. In a state of dull boredom and confusion, we receive some ‘hope’ of a quick vaccine, miracle cures, free prizes, tax refunds and discounted holidays. All are the normal lure via texts and emails.

This exploitation of emotion is a carefully defined strategy. They are fine-tuned persuasion techniques. They work. The intention is to cause panic, anxiety, fear (see note above re cortex) which results in an impulsive response and hey presto, an empty bank account.

“Your parcel is about to be returned today; you need to pay the small excess delivery charge” is an easy one. Most people are ordering online regularly and so it fits many homes’ way of life. The charge is so small you pay it, inadvertently giving your details to the fraudsters.

Take a long deep breathe when anyone is trying to panic you into a decision. Heightened emotion isn’t just negative emotion. Carefully timed emails and texts can go out around the time of the end of tax year, and you easily link to the positive message of a tax refund of, say, a random, but specific £312.

Small, specific, and enough to buy the kids a meal and your partner a fine glass of wine and once again it’s an easy click. Put in your bank details and your summer holiday funds are gone in an instant.

Remember also, that just clicking a link can infect your ‘smart’ phone with malware such as a keystroke, which then delivers the details of your bank account to a very undeserving source to merrily empty your account.

Obvious signs are cold calls such as a text, email, phone call. Financial services do not allow cold calling. You should be therefore on high alert. If you receive an email from a ‘trusted adviser’, be careful to click into the name on the email to see that it is the correct email. In any event, simply call the adviser who sent it on the number you have for them, rather than any that are listed on emails or such like.

Take. Your. Time. There is nothing that can’t wait. Leave the gold cow to the next man. The FOMO, or Fear of Missing Out is a human gut reaction that is forefront in the mind of any fraud strategist.

Websites are easily cloned so check the number at the top and assess against a google search for the same company. Check their name and details on companies’ house and if you are in any doubt, do not act. Speak to your accountant, solicitor or Independent Financial Adviser and they will know where to triple check.

The Financial Conduct Authority also have a warning list so you can type in the company there and check out if they are listed.

If you have a financial question, please call 01872 222422 or email info@wwfp.net or visit us on www.wwfp.net

Peter McGahan is Chief Executive Officer of Independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority.

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Worldwide Financial Planning Ltd are authorised and regulated by the Financial Conduct Authority (FRN: 440668)

'The FCA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'

Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.

All information is based on our understanding of current tax practices, which are subject to change.
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