Major High Street banks are today sounding the alarm about a looming fraud epidemic as cruel scammers target people who have become ‘emotional and panicked’ about the rising cost of living.
Banking giants including Barclays, HSBC and Santander are imploring customers to be extra vigilant as crooks exploit economic uncertainty.
Financial watchdogs and consumer groups have also issued stark warnings amid a surge in scams that prey on households’ financial vulnerability.
Online scams: Banking giants including Barclays, HSBC and Santander are imploring customers to be extra vigilant as crooks exploit economic uncertainty
Ross Martin, the head of digital safety at Barclays, told Money Mail: ‘We have two sides to our brain: one is more rational and one is more emotional.
‘Fraudsters want us to operate with the emotional side — the one that causes us to panic and make decisions without thinking properly.
‘As people become worried about their finances, they move into that emotional state, which is a gift to scammers.’
Earlier this month, the Daily Mail revealed that households face a £6,000 increase in their bills this winter, as energy costs, food prices and mortgage repayments soar. It came after the Bank of England hiked interest rates to a 27-year high and predicted a recession would hit before Christmas.
And, just last Friday, the energy watchdog Ofgem announced its price cap would rocket to a devastating £3,549 a year for the average family from October 1.
Banking trade body UK Finance warns that cynical fraudsters are already cashing in by impersonating power companies.
Research by online protection company McAfee reported a 10 per cent jump in the number of scams naming one of the ‘big six’ energy firms in the first three months of the year, compared with the same period last year.
Cifas, a fraud prevention service, last week warned that fraudsters were targeting households with emails claiming they had overpaid for their energy in 2020/2021 and directing them to fill out a form with their personal and financial information.
It said the emails used the logos of energy firms and had managed to bypass spam filters.
Which? has also alerted customers to emails purporting to be from Ofgem stating that the recipient is entitled to a refund. It says households should be on their guard if they receive an email from firstname.lastname@example.org.
Cifas adds that people in Kent and Stevenage have been called by crooks claiming they are eligible for the Household Support Fund and asking for their bank details to process the application. Yet no local authority would ever request this information by phone.
Fraudsters posed as Ofgem
Stephen Ralph was offered bogus energy rebates claiming to be worth £700
Stephen Ralph, 57, was targeted by scammers posing as Ofgem last week.
They sent the retired radiographer an email inviting him to claim two energy rebates worth £700.
But while the email used the same orange branding as the energy regulator, Stephen was sceptical.
And when he spotted a line saying he would have to claim by September 2020, he knew something was amiss.
Stephen, who lives in South Ayrshire, says: ‘I am appalled fraudsters are taking advantage of the cost-of-living crisis in this way.’
Fraudsters are also sending emails and texts offering fake money-saving schemes, such as food giveaways and fuel station gift cards.
One Money Mail reader received a scam call pretending to be from his mobile provider O2, saying he had qualified for a 40 per cent discount as a thank you for regularly paying his monthly bill on time. As he pays by direct debit, he was suspicious and ignored further calls.
Chris Ainsley, the head of fraud risk management at Santander, says: ‘Criminals who carry out scams are agile in using what is in the news or feeding off the current economic climate to prey on people’s hopes and fears.’
Meanwhile, banks say more customers are losing money after racing to snap up bargains on second-hand sites — which never arrive. It follows a boom in online shopping scams after millions were forced online during lockdown, making them easy targets.
Matthew Farrar, a senior fraud strategy manager at HSBC, says: ‘Fraudsters will take advantage of the rising cost of living to convince people to part with their money, and they are developing increasingly sophisticated ways of doing so.
We urge customers to be suspicious of any “too good to be true” offers or prices, and wary of requests to pay by bank transfer only.’
A TSB spokesman adds: ‘Financial pressure can make people more vulnerable to fake deals, goods or refunds which turn out to be clever ploys to obtain personal details and gain access to bank accounts.
Soaring bills: Energy watchdog Ofgem announced its price cap would rocket to a devastating £3,549 a year for the average family from October 1
‘We’ve seen examples of customers falling victim to messages offering cost-of-living payments and rebates on energy bills.’
Investment scams are also a growing concern as savers are desperately seeking ways to make their money stretch further.
Data from Barclays found fake investments now account for 32 per cent of fraud losses — with the total sum stolen increasing by 15 per cent in the second quarter of this year.
Figures from the FCA show that investment fraud made up 58 per cent of the potential scams consumers reported to the watchdog.
The Pensions Regulator is also advising that the cost-of-living crisis means struggling savers are more at risk of scams that claim they can access their money early.
AJ Bell’s head of retirement policy, Tom Selby, says: ‘Unscrupulous fraudsters will attempt to take advantage of vulnerability through any means possible, from offering early access to pensions to pushing dodgy investments promising sky-high, guaranteed returns.
‘Offers such as these might be tempting to people experiencing inflation on the brink of double digits.
But the reality is that, unless you’re in serious ill health, accessing your pension early will lead to a huge tax penalty from HMRC.’
Lloyds Bank reported a more than 90 per cent increase in ‘advance fee’ loan scams, which promise quick access to cash in return for an upfront payment. Victims lose more than £200 on average.
The City watchdog is so worried about loan scams it has relaunched a campaign to raise awareness.
Banking insiders also say cost-of-living pressures are tempting more people to act as ‘money mules’ — where they rent out their bank accounts to criminals who use them to handle stolen cash.
Earlier this year the Daily Mail revealed Britain was facing a fraud crisis, with losses rising to almost £3 billion a year.
We are campaigning for a major overhaul of the system, which includes appointing a minister for fraud.
To help spot a scam, free online training is available at friends againstscams.org.uk.