5 money transfer scams that appear during tough times

27 Apr 2020 - Category: Blog /
cyber security

During difficult periods most people will come together to look after their friends, family and community, but there will always be some who try to benefit from fear and uncertainty for their own financial gain. 

More than £2m has already been lost in the UK to Covid-19-related fraud and the National Cyber Security Centre has revealed that they removed more than 2,000 online scams in March 2020 alone. Before looking at specific type of money transfer fraud that you should be looking out for, here are three crucial points to remember:

  1. Always know who you are transferring money to
  2. Reject uninvited requests to transfer money internationally
  3. If it sounds too good to be true, it probably is

  • Loan scams

With economists predicting that household incomes may fall by 10% as a result of the current pandemic, fraudsters are targeting this by offering easy-access loans, regardless of credit history.

The trick to this scheme is that these false companies ask for an upfront fee to be transferred to them in order to cover insurance for the loan.This must be paid in advance of receiving the funds.

Once the money transfer is complete you won’t hear from the fraudulent company again, nor will you receive the loan.

Any lender or finance company, such as Small World, must be registered with the Financial Conduct Authority (FCA), which can be searched here. These legitimate companies won’t randomly contact you out and any that do should be treated as a potential scam.

  • Investment scams

We know that in normal times a lot of our customers send money home for legitimate investment opportunities. The current volatility of both the FTSE 100 and Dow Jones, not to mention the price of oil, means that investments offering large returns can be even more tempting.

If someone is coming to you with an investment offer which sounds too good to be true, one which needs you to transfer money immediately, it is going to be a scam.

These tend to be uninvited approaches – by phone, social media, email or text – and the investment opportunity is only available for a limited time.

  • Insurance scams

You may already have had flights cancelled or know that future travel plans to see your loved ones back home are likely to be disrupted. As well as the emotional upset there is also the financial worry that any flights you have already booked won’t be insured. It’s this uncertainty which scammers prey on. This particular ploy involves the scammer contacting you to say that you’re existing travel insurance policy has been cancelled and then reassuring you that it is possible to reinstate it for an additional fee – to be paid either by card or via money transfer.

Insurance scammers are increasingly sophisticated and may have the name or email address of a legitimate company. Be extra cautious. It is most likely a scam, but if you are unsure then contact your existing provider directly.

  • Bank scams

Many Small World customers will also have bank accounts that they use alongside our money transfer services. As well as phishing scams, criminals have also been contacting people claiming to be calling from their bank, advising that there are problems with their existing bank account due to the Covid-19 pandemic and asking them to transfer money to a new account.

By now you should know where we are going with this…

You can be extremely confident that any request of this type will be a scam, even more so if the alleged company asking you to transfer your money to them is being pushy or requesting that this happen immediately.

If you need further reassurance, contact your bank directly rather than trust a stranger on the end of a phone.

  • Pension scams

Pensions are another area targeted for money transfer fraud during times of financial difficulty. Similar to investment scams, fraudulent companies offer the chance for large rewards if you switch your existing pension to their more-attractive proposition.

Key phrases to look out for:

  • ‘Free pension reviews’
  • ‘Pension liberation’
  • ‘Legal loophole’
  • ‘Cashback’

If you are thinking of transferring your existing pension, you should always speak to an independent FCA-authorised advisor first.

Small World is committed to helping our customers, by being aware of these potential scams you should be able to continue to send money to a friend or family overseas. You can find further advice on fraud awareness, including a detailed awareness guide, here on our website. If you remain diligent and only transfer money to people and companies that you know and trust, then you greatly reduce the risk of being scammed during this difficult time.

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