How to recognise and avoid the most common finance scams

Date: 03 February 2023

Fraudsters are inventive, and they constantly come up with new ways to scam hardworking people. So what can you do to recognise and avoid the most common finance scams?

In our latest blog, we’re looking at the most common scams in operation right now and providing you with practical advice to make sure you stay savvy and protect yourself, your data, and your money.


What are the most common cyber scams?

Sadly, most of us have some experience with financial scams, whether we’ve fallen for them or managed to see through them.

So, what are the most common financial scams at the moment, and how can you stay savvy enough to avoid them?


Purchase scams

Purchase scams happen when you buy something online through a fake website, or via a fraudulent profile on a reputable website, like eBay, Amazon, or Vinted.

It could be anything, from lower-cost items like clothes and toys to high-ticket items like appliances and furniture.

They take your money, yet you never receive your item.


How to avoid purchase scams

Fake websites will sometimes mimic genuine ones and the URL might be very similar, so do a Google search instead of following links sent to you or posted online.

You can also search for independent online reviews to see what experiences other shoppers have had.

Using a credit or debit card to pay can offer extra protection if the worst happens, as you can contact your card provider to claim the money back.


Investment scams

Investment scams can happen in a number of ways – over the phone, via email, or even door-to-door.

Scammers can be very persuasive and charming, and play into your insecurities and fears around money.

Although the product or company you’re asked to invest in can vary wildly from forests to gold and everything in between, the general idea is that you pay your money into a fund, product, or organisation and never see it again – let alone see any return on your investment.


How to avoid investment scams

See through the charm of a salesperson and dig deeper before you part with your hard-earned cash.

Remember, anyone can create a professional-looking website nowadays, so look up whether the business is regulated by the Financial Conduct Authority or carry out a quick search on Companies House to find out if the company exists.

Generally, any promise of high yields on your investment should be a red flag, so unless you can verify the person, product and company are genuine, it’s best to avoid anything that sounds too good to be true.


Pension scams

Similar to investment scams, pension scams involve someone convincing you to transfer your pension pot into an alternative investment with the promise of high returns.

In 2015, the government introduced pension freedoms, which gave you the option to access money from your pension and invest it elsewhere.

Sadly, this has been exploited by pension scammers who try to convince you to transfer large amounts from your pension pot into a fictional fund, product, or company.

Once your money is transferred, you won’t see it again, and the pension you spent your entire working life building up is usually lost.


How to avoid pension scams

As with investment scams, be cautious if someone approaches you via phone, email, or in person out of the blue, offering high returns on your pension savings.

Again, you can do a quick search on the FCA website to see if a company is regulated and check on Companies House whether the business approaching you actually exists.

Often, a simple Google search will throw up news stories and forums detailing how others have been conned by the pension scam in question, so always do your research.


Loan fee scams

We all need a little extra help at times, so you may find yourself searching for loans online.

Scammers can access this data and approach you with the promise of quick and accessible loans, regardless of your credit history and financial situation.

After asking you to pay an initial fee, they will disappear and you’ll never see the loan – or the fee you paid to access it.


How to avoid loan fee scams

Reputable loan providers will never ask you to pay a fee to access a loan, so this should set off alarm bells.

Again, you can check the FCA website to find out if the organisation you’re dealing with is regulated to provide loans.

If you’re a GMB Credit Union member, you’re eligible for fast, affordable, and responsible loans to tide you over when you’re struggling financially.

We offer competitive rates, only lend what you can afford to pay back, and give you fair repayment periods and payment breaks. Plus, you pay interest on the decreasing loan balance, helping you to stay in control of your money and avoid spiralling into unmanageable debt.


Smishing scams

You may have heard of phishing scams which target you via email or vishing scams which use phone calls.

These are both types of identity fraud, and smishing scams are a type of identity fraud that uses text messages to reach you.

The text will appear to be from a recognised company, like your bank, a social media platform, or the Post Office.

Often, it will use fear tactics and create a sense of urgency to encourage you to enter personal information like account numbers or passwords or click on a malicious link.


How to avoid smishing scams

Always be wary of text messages appearing to be from a trusted source.

Don’t respond (even to reply STOP or UNSUBSCRIBE) or click on any links you receive via text without checking it’s from a genuine company.

If you’re unsure, contact the company directly to check, and remember your bank will never ask you to give away confidential data over the phone or text, so if something feels off, it probably is.


Gift card scams

Have you seen those social media posts promising a £100 Amazon or Asda gift card circulating online and wondered if it was all it seemed?

You’re right to be suspicious because gift card scams are growing in popularity all the time by masking as online competitions and giveaways.

You’ll be asked to scan a QR code (they are being used more and more in scams) or visit a link to claim your voucher, when you’re actually being directed to a fraudulent website.

As you probably guessed, you’ll never see that voucher and you may well have allowed hackers to access your data.


How to avoid gift card scams

Be wary of online competitions and giveaways.

If it’s claiming to be run by the company itself, go directly to the business and ask if it’s genuine before going any further.


How your credit union supports your financial safety

GMB Credit Union is part of the government’s Cyber Essentials initiative to protect you from the most common cyber attacks.

Scammers look for organisations that don’t have Cyber Essentials in place and target them for cyber attacks, so by having this certification we are showing our commitment to protecting your data and finances.

As well as offering you responsible loans and savings accounts, we also share regular tips, advice, and resources online to keep you safe from the risk of financial scams.

Together, we can stay safe against the threat of cyber attacks and help build a more secure online world.