Reviews and Ratings for Financial adviser Chris Wheatman, Lancaster

The cost of living crisis is giving scammers more opportunities. Here are 3 scams to watch out for

Scammers are taking advantage of financial worries as the cost of living rises. It’s more important than ever that you remain alert to potential fraud.

According to Citizens Advice, scammers have targeted more than three-quarters of adults this year – a 14% increase when compared to this time last year.

The Financial Conduct Authority (FCA) also warned that financial crime is to become “even more prolific” due to rising costs, MoneyAge reports.

Fraudsters are adept at using circumstances to make you more likely to overlook red flags.

From offering “guaranteed high-return investments” when investors are worried about getting the most out of their money, to taking advantage of Covid concerns to charge for fake tests during the pandemic, scams evolve to prey on vulnerabilities.

Now, some criminals are using cost of living concerns to scam more people.

At the Financial Crime Summit in London, the FCA’s executive director Sarah Pritchard said: “Financial crime is a bit like Covid. Like the virus, which mutates to evade destruction, criminals seeking to cash out and carry out financial crime are ever-changing – they will adapt to exploit new weaknesses in the financial system and will constantly vary their tactics when targeting the vulnerable for fraud.”

Here are three new cost of living scams you should watch out for.

1. Claims of debt support

As budgets are stretched and the cost of borrowing rises, people are increasingly worried about managing their debt levels.

If you have debt concerns, reaching out is an important step to take control. However, the FCA has issued a scam warning after signs that some criminals are offering unauthorised claims management services to people in the UK.

These firms are offering debt support, mainly related to mortgages, and claim that, for a fee, they can get debts “written off”. Some also claim borrowers could receive compensation from their lender, including reclaiming previously paid interest.

If you receive contact out of the blue, be cautious. Any firm that you deal with for debt management services should be authorised by the FCA.

You can use the FCA register to check if a firm is authorised, the permissions they have, and obtain contact details.

Charities, including StepChange, may also be able to offer support if you have concerns about debt and can signpost you to appropriate firms if you need to take further steps.

2. Energy bill rebates

Soaring energy bills during 2022 have been a cause for concern for many households. Since winter 2021, the price cap per unit on electricity and gas has increased by more than 100%.

To take advantage of this, scammers are claiming to offer energy rebates. During just two weeks in August, people targeted reported more than 1,500 energy rebate scams to the Suspicious Email Reporting Service, according to an Action Fraud report.

The government is giving every household £400 off their energy bill this winter, spread over several months. You don’t need to do anything to get the money or have to pay it back. Your energy supplier will either reduce your direct debit, refund the difference, or credit your prepayment meter.

If you’re eligible for additional support, payments are also automatic.

3. Friend in need

A convincing WhatsApp scam has cost victims more than £1.5 million this year, according to an ActionFraud report.

The “friend in need” scam involves a fraudster contacting you and pretending to be a family member or friend. They will ask you for money, often claiming they need to pay a bill urgently.

At a time when many families are struggling, it’s natural to want to offer help if you’re able to do so.

If the contact is out of the blue or not from someone who usually asks for financial support, this should be a red flag. Look at the way the message is written too, does it sound like the apparent sender?

Scammers try to exploit good nature and assume that people will want to help those they love. So, even if you’re certain the request is genuine, taking just two minutes to call the supposed friend in need can ensure you’re not scammed and put your mind at ease.

Who to contact if you’re worried about scams

If you think you’ve fallen for a scam, contact your bank immediately – they may be able to prevent the funds from leaving your account or offer compensation depending on the circumstances. You should also contact ActionFraud to report the crime.

If you have any questions about whether an opportunity is too good to be true or how it could fit into your financial plan, please contact us. Sometimes an outside perspective can help you spot the red flags you have previously overlooked.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Sign up to receive our newsletter

Receive our regular articles containing helpful hints and tips, straight into your inbox.

    Advice Matters is a trading style of Advice Matters Financial Planning Ltd which is authorised and regulated by the Financial Conduct Authority: 779172

    The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses are not able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financial-ombudsman.org.uk.