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Major High Street banks are sounding alarms today about an impending fraud epidemic as vicious scammers target people who have become ’emotional and panicked’ over the rising cost of living.
Banking giants such as Barclays, HSBC and Santander are urging customers to be extra vigilant as crooks take advantage of economic uncertainty.
Financial watchdogs and consumer groups have also issued stark warnings amid a wave of scams preying on households’ financial fragility.
Online scams: Banking giants including Barclays, HSBC and Santander beg customers to be extra vigilant as scammers exploit economic uncertainty
Ross Martin, head of digital security at Barclays, told Money Mail: “We have two sides to our brain: one is more rational and the other is more emotional.
“Scammers want us to work with the emotional side – the one that causes us to panic and make decisions without thinking carefully.
“When people worry about their finances, they get into that emotional state, which is a gift to scammers.”
Earlier this month, the Daily Mail revealed that households will face a £6,000 increase in their bills this winter as energy costs, food prices and mortgage payments soar. It came after the Bank of England raised interest rates to a 27-year high and predicted a recession would hit before Christmas.
And last Friday, the energy watchdog Ofgem announced that its price cap would rise from October 1 to a devastating £3,549 a year for the average family.
Banking trade association UK Finance warns that cynical fraudsters are already making money by posing as energy companies.
Research by online security firm McAfee reported a 10 percent increase in scams naming one of the “big six” energy companies in the first three months of the year, compared to the same period last year.
Cifas, a fraud prevention agency, warned last week that fraudsters were targeting households with emails claiming they had overpaid for their energy in 2020/2021 and instructing them to fill out a form with their personal and financial information.
It said the emails used energy company logos and managed to bypass spam filters.
Which? has also warned customers about emails purportedly from Ofgem stating that the recipient is entitled to a refund. It says that households should be wary if they receive an email from firstname.lastname@example.org.
Cifas adds that people in Kent and Stevenage have been called by crooks claiming they are eligible for the Household Support Fund and asking for their bank details to process the application. Yet no municipality would ever request this information by telephone.
Scammers impersonated Ofgem
Stephen Ralph was offered fake energy discounts that claimed to be worth £700
Stephen Ralph, 57, was targeted last week by scammers posing as Ofgem.
They emailed the retired radiologist asking them to claim two energy discounts worth £700.
But even though the email used the same orange branding as the energy regulator, Stephen was skeptical.
And when he saw a line that said he should claim by September 2020, he knew something wasn’t right.
Stephen, who lives in South Ayrshire, says: ‘I am amazed that fraudsters are taking advantage of the cost of living in this way.’
Fraudsters also send emails and texts with fake money-saving schemes, such as food giveaways and gift cards for gas stations.
A Money Mail reader received a scam call pretending to be from his mobile operator O2, in which he said he was eligible for a 40 percent discount as a thank you for regularly paying his monthly bill on time. Since he pays by direct debit, he was suspicious and ignored further calls.
Chris Ainsley, Santander’s head of fraud risk management, says: “Criminals who commit scams are adept at using what’s in the news or fueling the current economic climate to prey on people’s hopes and fears.”
Meanwhile, banks say more customers are losing money after racing to pick up bargains on second-hand sites — which never arrive. It follows a boom in online shopping scams after millions of people were forced online during the lockdown, making them easy targets.
Matthew Farrar, senior fraud strategy manager at HSBC, says: “Scammers will take advantage of the rising cost of living to persuade people to part with their money, and they are developing increasingly sophisticated ways to do that.
We urge customers to be wary of offers or prices that are too good to be true, and wary of requests to pay by bank transfer only.”
A TSB spokesperson added: “Financial pressures can make people more vulnerable to fake deals, goods or refunds that turn out to be clever tricks to obtain personal data and access bank accounts.
Rising bills: Energy watchdog Ofgem announced its price cap would rise to a devastating £3,549 a year for the average family from October 1
“We’ve seen examples of customers who have been victims of messages offering cost of living and discounts on utility bills.”
Investment scams are also a growing concern as savers are desperate for ways to stretch their money further.
Data from Barclays showed that fake investments now account for 32 percent of fraud losses, with the total stolen amount increasing 15 percent in the second quarter of this year.
Figures from the FCA show that investment fraud accounted for 58 percent of potential scams consumers reported to the watchdog.
The pension regulator also advises that the cost of living crisis is putting struggling savers more at risk for scams that claim they can access their money early.
Tom Selby, AJ Bell’s head of pension policy, says: “Unscrupulous fraudsters will try to exploit vulnerability in every way possible, from offering early access to pensions to pushing dodgy investments that promise sky-high, guaranteed returns.
“These kinds of offers can be tempting for people with inflation on the verge of double digits.
But the reality is that unless you are seriously ill, accessing your pension early will result in a huge tax penalty from HMRC.”
Lloyds Bank reported a more than 90 percent increase in “advance” loan scams, which promise quick access to cash in exchange for a prepayment. Victims lose more than £200 on average.
The city watchdog is so concerned about loan scams that they have launched another campaign to raise awareness.
Banking insiders also say the cost of living pressures are enticing more people to act as “money mules” — renting out their bank accounts to criminals who use them to handle stolen money.
Earlier this year, the Daily Mail revealed that Britain was facing a fraud crisis, with losses reaching nearly £3 billion a year.
We are campaigning for a major overhaul of the system, including the appointment of a Fraud Minister.
To help spot scams, free online training is available at friends againstscams.org.uk.
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