Sam Compton, director of Operations at Chetwood Financial, examines what the Government’s Crackdown on Financial Fraud Means for consumers – especially for seniors
Financial fraud has become a significant concern for Britons, as challenging economic landscapes are the ideal conditions for a matching increase in financial crime. Fraud appears to be on the rise in the UK, with four in ten adults having experienced a scam attempt in the past 12 months, and news that banks are closing more than 1,000 accounts every working day, often citing financial crime as the cause.
The recent initiation of a consultation process by the UK government to ban cold calls related to financial products is a clear reaction to this trend, prioritising better safeguarding consumers from falling prey to scams and fraudulent schemes.
Better measures to prevent and reduce fraud are encouraging, especially those that target the elderly. Each year, around 1 in 12 older people report falling victim to a scam, though the real figure is likely far greater, as fraudsters seek to take advantage of their advanced age and presumed lack of tech literacy for their own financial gain.
Battling fraud is an important part of our responsibility to support the elderly, and this consultation is a step in the right direction – but what does it mean for consumers both young and old? And what would seniors do well to know about the most common types of fraud and fraud response to keep themselves safe?
What the consultation entails
The 8-week consultation period, targeting cold calls that promote fraudulent cryptocurrency schemes, mortgages, and insurance, aims to make life more difficult for fraudsters who employ aggressive marketing tactics to lure victims into fake investment opportunities, thereby reducing the staggering £750 million in financial losses incurred over the past year due to fraudulent investment schemes.
As part of the government’s comprehensive approach to combating financial fraud, the National Economic Crime Victim Care Unit has been extended to cover all police forces in England and Wales. This extension signifies a dedicated support service for victims, providing them with the necessary assistance and guidance during distressing times.
The consultation’s impact on consumers is two-fold. On one hand, it promises relief from the persistent nuisance of cold calls that often serve as gateways to financial exploitation. On the other, it necessitates consumers to stay informed about the various forms of financial fraud that have proliferated in the digital landscape.
Types of fraud and how to respond
From sophisticated phishing emails to counterfeit investment platforms, scams have evolved to appear increasingly authentic, catching even the most cautious consumers off guard. Banks have a responsibility to make their customers aware of the dangers of fraud, especially education around the types of scams their users are most likely to encounter.
The most common type of fraud is the Authorised Push Payment (APP), where the scammer poses as a victim’s loved one, their bank or some other trusted authorisation to convince them to transfer large sums of money. This can be accomplished over the phone, by text, email, or frequently over social media, requiring a degree of scepticism among consumers.
There are steps banks are already taking to prevent these types of threats, with many introducing additional safeguards in their transactions process to discourage APP fraud. However, the variety of fraud types is so overwhelming, being aware of the differing types of scams is not as effective as recognising the common themes. Banks should encourage their users – especially seniors – to treat healthy scepticism as their first line of defence, and to assume that anything that seems suspicious or ‘too good to be true’ probably is.
Scammers will attempt to pressure their victims, through urgency or emotion, while legitimate businesses rarely operate at that speed. What’s more – banks are more likely to ask customers to contact them than to reach out directly, so if in doubt, hang up and call the bank back. This is a sentiment that banks must impress upon their customers – users who know their bank will never phone them directly are better protected from phone scams.
In the unfortunate event of falling victim to a scam, consumers must be aware of the steps to take. First and foremost, contacting the relevant authorities and reporting the incident is crucial. Whether it’s the police or specialised fraud agencies, prompt action can aid in mitigating the impact of the fraud and potentially apprehending the culprits.
Additionally, individuals should alert their banks or financial institutions to prevent further unauthorised transactions.
The battle against fraud
Hopefully, the outcome of this consultation will be greater shielding of consumers from scams and fraudulent schemes. As long as fraud remains prevalent, Seniors best bet when it comes to protecting themselves from fraud is to stay informed, sceptical, and always think twice before sending money.
Nobody should have to experience falling victim to fraud in their lifetime, and any measures made by the government to protect its citizens are gladly welcomed. For those that do, responding swiftly and appropriately can mitigate the worst consequences, though there is no greater treatment than prevention.
[Main image: jr-korpa-ZWDg7v2FPWE-unsplash]
