Personal Finance

Invasion of the scammers: why is Britain so vulnerable?

IS FRAUD on the rise, or in retreat? Rather like the crime itself, the statistics are multi-layered. According to Britain’s main fraud prevention service, Cifas, which houses the most comprehensive database of confirmed fraud data, cases overall fell 11 per cent last year, thanks to police crackdowns. But there are still 600 incidents confirmed every day and – given the noted reluctance of fraud victims to report crimes – that figure is almost certainly the tip of the iceberg. 

A separate study by Citizens Advice, which has just launched Scams Awareness Month to encourage a fight-back, found that around four million UK households fell victim to scammers in the past year (a 25 per cent rise), with the elderly and hard-up particularly vulnerable to “invasion through their computers, phones, letterboxes and on the doorstep”. 

Police and criminals have long played a cat and mouse game. No sooner is a particular type of scam uncovered and stamped out than another is devised. But the stakes have been upped considerably in recent years. This is partly because the number of channels through which fraudsters can target the unwary has multiplied; and partly because ID theft – involved in half the frauds reported last year – is so much easier. One reason is our casual attitude to sharing personal information online. A recent victim had a fraudulent bank account opened in her name using details obtained from a photo of herself holding her driving licence – originally posted (doubtless in celebratory spirit) on Instagram. 

Scams have also become much more sophisticated – increasingly fooling even those who would disdain to click on a link in an unsolicited email, or fall for a financial hardship sob story on a dating site.  “Most people have had a chuckle about obvious fraudulent misspelt messages from Nigeria,” observed Martyn James of the Financial Ombudsman Service earlier this year.  But con artists have become much more convincing in the ruses they deploy to persuade people to part with cash or personal details that can be used to hijack identities.  

This year, for instance, has seen a marked rise in the number of self-assessment taxpayers targeted. In February, HMRC warned of a 47 per cent rise in numbers of “phishing” emails, masquerading as genuine missives from the tax office, promising refunds to those gullible enough to reply with their bank details.  

Still more insidious is the rise in cases in which victims are targeted by conmen who have hacked into the email accounts of professional advisers like accountants, solicitors and stockbrokers. If, as happened to one woman, you receive an email from your accountant giving instructions on how to pay your VAT return, including an account number and sort code, you might be none the wiser. Until, that is, you later receive an urgent demand for the outstanding sum from HMRC (£20,000 in this case) and realise you’ve been done.  

If identity theft, as the experts claim, is where most fraud begins then we’re particularly vulnerable in Britain. A 2012 survey, conducted by the research group Fellows found that UK consumers are at greater risk of than any other country in Europe – partly because we’re so slow to detect we’ve been targeted. It takes, on average, seven months before Britons realise that they have had their identity purloined, compared with 4.8 months and 5.6 months in Belgium and Italy respectively.

The answer of course is to be much more proactive about regularly checking your credit file, where any untoward activity is most likely to show up first. Banks and financial institutions have also been urged to apply more stringent checks on individuals setting up accounts.  

But finding the right balance is proving tricky. In recent weeks both HSBC and the online stockbroking platform, Selftrade, have come under fire for subjecting clients to overly intrusive questioning. Indeed, the latter refused fundholders access to their own cash, unless they answered a detailed questionnaire into its exact origins, including the names of previous employers and details of past inheritances.

Customers have, quite rightly, rebelled. Apart from the issue of why Selftrade feels it has the right to demand information way in excess of what, say, HMRC requires, think what a treasure trove it would be to anyone bent on mischief hacking into its systems. As we learned from this week’s Mortgage Market Review, financial firms are building ever-larger files on customers – probing everything from spending patterns to lifestyle choices. We can only hope they’re paying similarly close attention to their security systems. 

Creative Commons image by Don Hankins


Personal Finance

Pension freedoms prompt £1.7bn annuities merger

Personal Finance

Are you being ripped off for car or home insurance?

Personal Finance

Will low-interest rates kill free banking?

Personal Finance

Best ways to borrow while rates are so low