UK investment fraud reports jump by a third as criminals exploit COVID pandemic

LaToya Harding
·Contributor
·3 min read
Close up mature man using phone, holding plastic credit or debit card, senior grey haired customer making secure internet payment, shopping or browsing online banking service, entering information
People aged 55 and over, with access to their retirement funds, fell victim to investment scams with offers of outlandish returns. Photo: Getty

Reports of investment fraud in the UK climbed 32% as criminals sought to capitalise on the coronavirus pandemic by tailoring scams to fit changing lifestyles.

Losses from these scams rose 42% to £135.1m ($186m) last year, with people of all ages targeted, while “authorised” fraud losses increased 5% to £479m, UKFinance reported.

In particular, people aged 55 and over, with access to their retirement funds, fell victim to investment scams with offers of outlandish returns.

Impersonation scam cases, where fraudsters pretend to be from trusted organisations such as the NHS or government departments, also nearly doubled to nearly 40,000 cases since the start of the health crisis.

UKFinance added that criminals were also adapting to the rise in online shopping and remote working by impersonating parcel delivery companies, e-commerce platforms or broadband providers.

“In a year when coronavirus and the national lockdown led to a surge in vulnerability in the UK, the spike in scams was predictable but nonetheless shocking,” Tom Selby, senior analyst at AJ Bell, said.

“If you are tempted by an online offer of this nature, or are contacted out of the blue by someone you don’t know about your pensions and investments, display extreme caution and be sure not to hand over your money without checking you are dealing with a bona fide, regulated organisation.

“Failure to do so could result in your money being stolen and your retirement dreams going up in smoke.”

READ MORE: Online scams skyrocket as toll reaches £1.7bn in a year

Bank staff on the frontline have been working throughout the pandemic to protect customers from fraud and to help the police catch those responsible.

The industry stopped £1.6bn of unauthorised fraud losses in 2020, data showed, equivalent to £6.73 in every £10 of attempted fraud being stopped.

Bank branch employees are trained to spot the signs of fraud that suggest customers may have fallen victim to one of these scams and make emergency calls to the police. The Banking Protocol, the bank branch rapid response scheme that stopped £45.3 million of scams last year, is now being expanded to include online and telephone banking.

In addition, the banking industry funded Dedicated Card and Payment Crime Unit arrested over 100 fraudsters during the year, including criminals involved in COVID-19 scams, the report said.

READ MORE: 'I take responsibility' for failure to stop £236m 'suspected fraud', says Bank of England chief

It comes as half of the UK adult population show characteristics of vulnerability including poor health, low financial resilience or recent negative life events.

The Financial Conduct Authority (FCA) has previously said that COVID-19 has had a severe impact on financial resilience of Brits, with over a quarter of adults (some 14.2 million people) being labelled as having ‘low financial resilience’.

“Depressingly, this uncertainty and distress is like catnip to scammers, who use increasingly sophisticated tactics to prey on the vulnerable,” Selby adds.

“The political response to this ever-present but evolving threat is often piecemeal, in part because the issues span different areas of Government. The decision to not include financial scams in the Online Safety Bill, for example, has been met by understandable incredulity by campaigners.

“Given the rising incidence of scams, we believe there is a strong case to be made for creating a Minister for Scam Prevention role.

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