Trade association UK Finance has discovered a surge in online scams throughout 2020, including impersonation and investment fraud.
It said that criminals exploited people’s fears about the covid-19 pandemic to defraud them of their life and pension savings.
According to the association, impersonation scams almost doubled last year with 39,364 cases, marking it the largest increase in scams of any kind.
Fraudsters pretended to offer government support to those impacted by the virus as well as sent bogus texts requiring payments to book a vaccine, and posed as delivery companies to take advantage of the surge in online shopping during the various lockdowns.
Investment scam reports increased by 32% in 2020, with losses to such fraudulent activity rising by 42% to £135.1m ($186.3m, €156.7m).
‘Display extreme caution’
Tom Selby, senior analyst at AJ Bell, said: “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.
“Investment scam activity in particular has been on the rise, with fraudsters targeting people of all ages – and particularly those over 55 who can access their retirement pots – with offers of outlandish returns.
“In reality, of course, these returns often don’t materialise and, in many cases, the underlying investment simply doesn’t exist.
“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.”
Katy Worobec, managing director of economic crime at UK Finance, added: “We are seeing a worrying rise in online and technology-enabled scams that evade banks’ advanced security systems and use digital platforms to target victims directly, tricking them into giving away their money or information.”
Both Selby and Worobec believe now is the time to pass legislation to protect savers from such savvy criminals.
Worobec said there is scope within the upcoming Online Safety Bill “to ensure online platforms take action to protect customers by taking down scam adverts on search engines, removing fake profiles on online dating websites and tackling fraudulent content on social media”.
“It cannot be right that online firms are effectively profiting from fraud, while society as a whole pays the price.”
Selby, on the other hand, believes the UK government should create a position for a ‘minister for scam prevention’, given how widespread online financial fraud is becoming.
“Over half the UK adult population – 27.7 million people – show characteristics of vulnerability including poor health, low financial resilience or recent negative life events,” he said.
“Covid-19 has also had a severe impact on financial resilience of Brits, with over a quarter of adults labelled as having ‘low financial resilience’ by the FCA. Depressingly, this uncertainty and distress is like catnip to scammers, who use increasingly sophisticated tactics to prey on the vulnerable.
“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. This would ensure direct ministerial responsibility for addressing the scams epidemic, ensuring interventions are focused in the right areas and help join thinking across different departments.”