Why you shouldn’t underestimate the wellbeing impact of financial scams

Category: News

Scam numbers rocketed during March 2020 as unscrupulous fraudsters took advantage of consumer fear and uncertainty resulting from the pandemic. Action Fraud announced a 400% increase in reports for that month alone and figures remained high for the rest of the year.

Worryingly, the UK Finance Half Year Fraud Update for 2021 confirms that fraud numbers are still rising. From January to June 2021, criminals stole £753.9 million through fraud, 30% higher than the same period last year.

Authorised Push Payment (APP) scams – where a victim is duped into transferring funds directly to a scammer – increased by 71%. Impersonation scams that specifically involved fraudsters claiming to be from the police, or the victim’s bank, rose by 129%.

And yet a new report confirms that the wellbeing impact of scams can be more significant, even if the stolen money is reimbursed.

The effect of scams on wellbeing is often higher than the financial impact

A recent Which? report has confirmed that the wellbeing impact of financial scams could be as high as £2,509 per victim. This is higher than the average physical amount lost to fraud, which is around £600 per victim.

The research was based on the more than 17,000 responses to the Office for National Statistics (ONS) Crime Survey for England and Wales.

Action Fraud, as reported by Which?, receive more than 300 reports each week where the victim is emotionally distressed. Of these, 241 phone calls between January and November 2020 flagged a “threat to life”, where operatives have kept callers on the line until police or ambulance crews arrived.

Falling victim to fraud can be incredibly stressful and detrimentally affect your emotional wellbeing. It is associated with higher levels of anxiety and lower levels of happiness.

Meanwhile, a 2020 European Commission survey found that 79% of fraud victims experienced a negative emotional impact. More than half (57%) of respondents experienced emotional or physical harm without any financial loss. Even when the scammer fails, or the victim is fully reimbursed, the act of being conned can still affect us emotionally.

There are things you can do to lower your chances of falling victim

Be on the lookout for pension scams

Pension cold-calling was banned in 2019. This means that if you receive any unsolicited contact about your pension – via phone, text, email, or in-person – it is highly likely to be a scam.

Fraudsters will usually claim they can help you access your funds earlier than age 55. Doing so will be deemed an unauthorised payment by HMRC and will likely see you liable for a 55% unauthorised payment charge on top of any fees paid to a scammer.

Also, be on the lookout for:

  • Phrases including “pension review,” “guarantee” or anything described as “low risk”
  • Any time-sensitive offer or attempt to rush you into making a poor choice with insufficient time to complete due diligence
  • Investments in high-risk areas or investments based overseas, as these are unlikely to be regulated by the FCA.

You can check the FCA’s ScamSmart site for further information. Also, be sure to use the FCA register to check that the firm you are in contact with is regulated and authorised to complete the process they claim to be able to do for you.

Banking, investment, and APP scams

You might receive telephone calls, emails or texts from individuals claiming to be from HMRC, the police, your bank, or your doctor.

Always check email addresses and phone numbers to see if they match the one’s you usually use and never click on any link or reply to a message without being sure it is genuine.

Search for a number or email address online and use this to contact the party involved.

Links could easily send you to dummy sites designed to mimic real web pages but intended only to harvest your data. It is also possible that scammers could visit the genuine sites themselves and set themselves up as an employee in order to scam you.

If you are worried you have fallen victim to fraud you can visit www.actionfraud.police.uk or call 0300 123 2040.

Get in touch

Falling victim to fraud can be devastating, both financially and emotionally. Be vigilant against potential scams and be wary of the contacts you receive. Always check with relevant parties before dealing with unknown or suspect contacts and speak to us before you make any important financial decisions.

Please email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can help you.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.