Financial scams is one of the biggest problems that the advice sector needs to tackle and the covid-19 pandemic has made that even harder.
Aviva recently surveyed over 2,000 people for its fraud report, which looks at financial scams relating to pensions, savings, investments and insurance, and found more than one-in-five (22%) have been targeted by suspicious communications (emails, texts and phone calls) which mentioned coronavirus.
This equates to 11.7 million people in the UK.
Almost half (46%) didn’t report these suspicious communications, even though they suspected it was a financial scam.
The most common (41%) reason given was because they didn’t know who to report the communication to.
Aviva also found that one-in-12 (8%) of those surveyed have been the victim of a financial scam which related to coronavirus.
Of those, 41% said being the victim of a scam negatively affected their mental health.
Peter Hazlewood, group financial crime risk director at Aviva, said: “While the types of financial scams are generally the same as those before the pandemic, fraudsters are exploiting the pandemic to take advantage of people when they are at their most vulnerable.
“They are using coronavirus as a pretext to lure potential victims. The scams range from attempts to sell people unsuitable insurance to, at worst, stealing their entire retirement savings.
“The impact on victims is not just financial either, it has a detrimental effect on people’s mental wellbeing too.”
Health insurance scam rise
The research also shows that suspicious communications, such as emails, texts and phone calls, which relate to health insurance have increased by 15 percentage points since the pandemic.
There were also increases in suspicious communications linked to life insurance (10 percentage points), pensions (3 percentage points) and annuities (2 percentage points).
|% who reported receiving suspicious communications|
|Financial services product||01 Jan 2019 – 29 Feb 2020
|01 Mar – 15 Jun 2020
Most common scams
Aviva’s research also highlighted the most common scams found in the financial advice sector.
- The policy review: A typical health and life insurance scam which involves a cold call telling consumers ‘It’s time to review your policy’; and
- Pensions, investment and savings: As stock markets have fallen in value and the Bank of England interest rate is at 0.1%, people with investments are much more vulnerable to falling victim to scammers offering unrealistically high rates of return. People are usually offered a ‘unique’ investment opportunity or the chance to unlock cash in a pension.
Hazlewood added: “It’s clear from our research that fraudsters will use whatever tactics necessary to get hold of people’s hard-earned money.
“If you’re interested in getting a lower premium or taking out a new insurance policy, do a bit of research yourself, and don’t be forced into anything by unexpected phone calls from strangers.”
The report also found that people in finance and tech-savvy jobs were more likely to fall for a scam.
Some 22% of victims were accountants, while 17% worked in IT.
The top five professions most likely to have fallen victim to a scam during coronavirus pandemic are:
- Accountant (22%)
- IT (17%)
- Customer service (11%)
- Administration (8%)
- Teacher (5%)
Hazlewood said: “You might think people who have a professional qualification, like accountants, and those working within IT would be more resilient to scams.
“However, becoming a victim of fraud can happen to anyone. People often feel embarrassed to admit they have fallen for a scam but there is no shame in it, these fraudsters are surprisingly professional and convincing.”