How to protect yourself from pension scams and financial fraud

Pension scams and financial fraud cause untold damage to people’s finances and their lives. Sadly, in a digital age, there are more sophisticated forms of fraud than ever before – and many are hard to spot until it’s too late. Between January to May 2021, a total of £2,241,774 was lost to pension scammers, with an average loss of £50,949. Throughout 2021, unauthorised financial fraud involving payment cards, remote banking, and cheques totalled £730.4 million, while nearly 200,000 incidents of ‘authorised push payment’ scams netted criminals a further £583.2 million.

Given this backdrop, it’s more important than ever to protect yourself against scams and fraud. In this article, we guide you through some of the most common ways criminals try to steal your money, give you tips on how to spot potential scams and fraud, and help you to protect your finances and pensions.

Types of fraud and scams

There are hundreds of different types of fraud and scams, with new ones emerging regularly. Many organisations offer resources that detail the latest frauds and scams, including the Financial Conduct Authority, Barclays and HSBC, so it’s worth checking these. You can also sign up to the National Trading Standards Scam Alert or Which? Scam alerts and receive emails alerting you to the most recent scams.

To help you recognise the most common financials scams, we’ve summarised some of the ones you are most likely to encounter.

Pension scams

Pension scammers will normally contact you out of the blue. There are three main types of personal pension scam:

Pension liberation scam. The scammers will offer to help you take money from your pension before the age of 55. They may encourage you to transfer your pension to an account they have set up, often located abroad. The scammers may ‘loan’ you an amount from your pension (for a high fee) or simply steal your money outright. You could also face a tax bill of 55% on the money you transfer.
Pension investment scam. The criminals will entice you with promises of high returns on your pension investments. Again, the aim is to get you to transfer your pension to one of their accounts.
Pension review / advice scam. This is when scammers offer you a free ‘pension review’ or ‘pension advice’ to get information about your pension. They will then use this to pose as you and transfer your pension to their account.

How to spot pension scams

Since 2019, it has been illegal for companies to make unsolicited calls about your pension. You also cannot access your pension fund before the age of 55, and regulated pension advice from a legitimate provider is normally a chargeable service. If you receive any unexpected communication about your pension, ignore it – it’s almost certainly a scam. You can also use the FCA’s Warning List to check out whether a pension opportunity or a company is likely to be legitimate. Anyone offering financial advice should be registered with the FCA; before taking any advice, you should always check the register first.

Phishing, vishing and smishing

These are three related types of fraud, conducted respectively via email, phone calls, and text messages.

Phishing is when scammers send you emails that contain a link which appears to be from your bank, PayPal, an online retailer such as Amazon, or other legitimate sources, such as HMRC. The message might tell you your account has been compromised or that money has been taken. Clicking on the link will install malware on your device and take you to a fake website which then steals the information you enter.

Vishing is a phone scam. The caller will usually pretend to be from your bank or building society and will try to get you to reveal your account details and passwords. Sometimes the scammers will claim they are from HMRC and offer you a tax refund.

Smishing is a text-message scam. You’ll receive a text claiming to be from your bank or other legitimate source. It may contain a link to a fake website or give you a phone number to call. Again, the aim is to get you to reveal your banking or other security details.

How to spot these scams

If you receive an email, check that the email address is actually from who they are purporting to be (however, note that some scammers can forge this). Also check the email is addressed to you by name. Greetings such as ‘Dear Sir’, ‘Dear Madam’ or ‘Dear Customer’ will never be used by your bank or other legitimate sources. Don’t click on any links; if it is legitimate then you should be able to find the page on the companies’ website by searching for it yourself.

If you receive a call, remember that your bank, HMRC, or retailers will never ask you for secure information like your bank account passwords. If in doubt, end the call and wait a few minutes (in case the scammers have hijacked your phone line), then ring back using the number on your bank card or the organisation’s website.

Finally, if you get a text message, never click on a link, and only ever ring back using the phone number published by the organisation.

Advance fee fraud

This is when you receive a message saying that you will receive a large sum of money, such as from a lottery win or an inheritance from a distant relative. The scammers will ask you to pay a sum of money to release the much larger sum (which will never materialise). They may also ask you for your bank details, along with personal documents such as your passport. They can then use this information to steal your identity and run up debts in your name.

How to spot these scams

If you receive an email promising you a large sum of money it is almost certainly a scam. It’s always best to use common sense, for example, if you haven’t entered a lottery you can’t win it. If you were unaware of a distant relative, why would they want to leave you money? If something sounds too good to be true, it probably is.

Investment scams

These are relatively straightforward scams. Criminals will get in touch to offer investment opportunities with high returns and often claim there is little risk. The scammers might say they have ‘insider knowledge’ about certain stocks and shares, or they might convince you to make investments in gold, crypto assets, foreign currencies, real estate, or even commodities such as gas and oil. In all cases, you’ll be encouraged to hand over money which you’re unlikely to ever see again.

How to spot investment scams

If someone is offering high returns with little risk, the chances are that they are a scammer. It’s generally wise to ignore unexpected approaches like these. However, you can check whether a company is regulated by the FCA or appears on its warning list.

Authorised push payment scams

This is when scammers trick you into sending them a payment. They may hack into your email account to find details of businesses that you deal with and then pose as one of these businesses and request payment. Sometimes the criminals will send text or WhatsApp messages pretending to be a close relative saying they’ve lost their phone and need money urgently, for example. Another variant is the invoice scam, when the scammers send fake invoices to businesses hoping they’ll get paid.

How to spot authorised push payment scams

If you are asked to make a payment always check the request is legitimate – even if you were expecting the request. Verify that the correct company has emailed or messaged you and that their bank details are correct. If you get an unexpected message via WhatsApp, text, or social media asking for money, directly contact the person they are claiming to be (e.g. if the message is supposedly from a relative ring them on their usual number and ask if they have contacted you via another number to request money).

Other common scams

There are other scams to keep an eye out for. These include:

Charity fraud. You’ll be asked to make a donation to charity. If you receive a call or message never give out your personal or financial details. If you want to donate to a charity contact them directly. You can also check a charity is legitimate via the government’s Charity Register.
Pharming. Scammers take over a legitimate website and redirect you to a fake one, where you’re encouraged to hand over personal and/or financial information. Always check a website’s URL is correct before entering any details.
Dating fraud. The criminals will set up fake profiles on dating sites and use them to build up a romantic relationship with you online. They’ll commonly ask for money to cover the travel costs of coming to see you, or to help an ill relative for example.
Ticket scams. People set up fake websites selling tickets for popular events such as concerts or sports fixtures. They’ll take your money and send you fakes or nothing at all. Always make sure that any ticket website you use is legitimate.
Courier scams. You’ll get a call from someone pretending to be from your bank, or even the police. They’ll say there’s suspicious activity on your account and trick you into revealing your personal and financial details. They’ll then say your bank card needs to be replaced and send a ‘courier’ round to pick it up.
Doorstop scams. People posing as tradespeople will call at your house and convince you that work needs to be done on your home. They’ll ask you to pay in advance and may even start the work. They’ll then ask for more and more money before disappearing.

It’s also worth remembering that criminals will always exploit new opportunities. For example, in recent years we’ve seen energy grant scheme scams and even scams that exploited the death of Queen Elizabeth II.

How to report financial scams and fraud

If you think you’ve been targeted by scammers there are several things you can do. Firstly, you can report the incident to the following:

Information Commissioner’s Office (ICO). This is for reporting scam calls and messages.
National Cyber Security Centre (NCSC). For reporting scam emails, texts, phone calls, websites, and adverts.
Report it to the police and get in touch with Action Fraud. This organisation may be able to help track down the scammer.
If a scam concerns your bank, building society, or a government department such as HMRC, you should report it to them directly.

What to do if you’re unsure about a communication

If you are unsure about any communication or think it may not be genuine, it’s best to contact the relevant organisation to check with them direct before taking any action. Clients of Alan Boswell Financial Planning can contact us if they have received unexpected or unsolicited contact from anyone regarding their financials and are unsure if it is legitimate and we will look into it for you.

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How to protect yourself from pension scams and financial fraud

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