There’s no shortage of schemes designed to part you from your hard earned cash. In fact the cost of fraud in the UK has been estimated to be as high as £193 billion per year.
And while some scams are pretty basic, others are really sophisticated and could fool even the most savvy of us. Scams are something the Financial Conduct Authority (FCA), the UK’s financial regulator is increasingly concerned about, and they’ve launched a campaign called ScamSmart to help raise awareness of common scams.
So in the fifth episode of our podcast, Money Bites by Smart Money People, we decided to take on all things scams. We highlight some of the most common financial scams, share some top tips for avoiding scammers, and have an interview with YouTuber Jim Browning. It’s fair to say, Jim really doesn’t like scammers, and he uses his YouTube channel to spread awareness of how these scams work.
It’s important to remember, particularly when it comes to investments, that there’s a level of risk involved, and you could end up losing money when investing in a legitimate investment opportunity. So before you part with your money, it’s really important to try and understand the risks involved.
It’s really not always easy to spot a scam, so here are four questions to ask yourself if presented with an opportunity.
1) Does the offer you’re being made seem a bit too good to be true?
In the current climate, a guaranteed annual return of 10% or more should be viewed with scepticism. If the opportunity turns out to be legitimate, there’s likely to be a fair bit of risk involved.
2) Have you been contacted out of the blue?
While some legitimate financial firms may send you unsolicited mail, or even engage in cold calling, most will not. So if you’re contacted out of the blue, it’s best to exercise caution.
3) Does the company contacting you have a good internet footprint?
Understanding who you’re dealing with is always important. Start with a google search. If there’s not a lot of information available, then that’s not a good sign. It’s also worth checking the FCA register too, as all UK regulated firms will be listed here.
4) Are you being pressured into saying yes?
All financial firms have sales targets to meet, whether they’re selling credit cards or pension advice. But scammers can tend to take a particular high pressured sales approach. If you feel pressured into saying yes, it may be best to just say no.