There’s no shortage of unscrupulous people willing to do whatever it takes to get access to your cash. A bit of knowledge and caution goes a long way.
Scams can come in many different forms. Familiarising yourself with how particular scams work makes them much easier to recognise. But there are also some things most scams tend to have in common:
Types of scams
The most common “is this a scam” questions we receive at UKPF relate to investment and trading schemes.
Depending on what is in vogue, scammers might claim to be savvy investors in:
- Bitcoin or other cryptocurrency trading
- Gold, silver, oil, or other commodities
- Forex (foreign exchange trading)
- Wine, cars, car-parking spaces, and other ‘tangible assets’
These scams are always innovating, so don’t treat this list as exhaustive. What asset is being discussed is immaterial – it’s chosen purely to convince you that this is a legitimate investment, so that you will send the scammer your money.
There are many variations of the scam, but they tend to share similar hallmarks. If you see any elements listed here, it is a clear 🚩.
- Promises of exceptionally high returns (anything in excess of 10% per annum should be treated with suspicion – and many of these scams promise 10% per week)
- ‘Guaranteed returns’ of any kind, despite apparently investing in volatile assets
- Buzzwords like ‘algorithm’, ‘machine learning’, ‘latest technology’
- The company offering the scheme being domiciled in a non-reporting country (e.g. Virgin Islands, Panama), or the location not being disclosed
- The company not being regulated by the Financial Conduct Authority
Very often, after an initial ‘deposit’, a small amount of ‘excess profit’ is sent back to the victim, which can be incredibly persuasive to encourage further ‘investment’ in the scheme. Needless to say, the victim will not see the further profits they been promised. If asked for a full withdrawal the scammer is likely to string the victim along with excuse after excuse, promising even higher returns if you invest just a bit more. Eventually when they can’t get any more out of you the scammer disappears entirely (only to pop up again a few days or weeks later running their scam under another name).
These scams can be run by individual scammers hoping to make a quick low-effort profit and disappear, but increasingly they are operated by organised crime syndicates. These groups have the resources to maintain fully functional and professional ‘investment’ websites and apps, and their staff are trained and experienced in exactly what to say and do to appear trustworthy, and can devote many hours to building relationships with their victims.
These professionally-run, high-investment scams are sometimes known as ‘pig butchering’ scams, as the scammers invest a long time building the relationship with their victim (fattening them up), before taking everything they have. They are extremely dangerous.
- 🔖 What is a Pig Butchering Scam? from Wired
- 🔖 FCA Register – check if a company is regulated by the FCA
- 🔖 FCA list of known unauthorised/unregulated firms and people – by no means exhaustive
- 🔖 A crowdsourced list of suspected investment scams on ScamNewsChannel.com
Property/Crypto/Trading training courses
Alongside the scammers trying to get you to ‘invest’ with them directly, on social media you are also likely to encounter scammers selling courses promising to teach you the secrets to build wealth through trading, property, crypto, forex and more. The people advertising these courses make a point of showcasing their wealth and success to prove to you their techniques really work – but it’s important to know that they didn’t make that money in property or trading, they made it by selling people like you courses promising to make them rich. Their sole aim is to take your money.
The courses themselves will contain little to no useful information, and be designed purely to hype you up to buy more courses. They typically have an escalating fee structure, so that the first step is not too difficult or unaffordable to take. Once they have you in the room, they can apply pressurised sales tactics to get you to sign up for more expensive courses (in the hopes of actually getting somewhere with your new venture!), and this cycle will continue without you ever getting true value from the course materials or contacts they claim to provide.
- 📺 ‘The Contrepeneur Formula Exposed’ by Mike Winnet (20 mins) discusses some of those pressurised sales tactics and includes recorded and re-created footage.
- 📺 Meet The Youtuber Exposing “EXPERT TRADERS” by Taking Their Course by Coffeezilla (1hr interview)
Pension ‘unlocking’ schemes
‘Can I access my pension now?’ is not an uncommon question on the UKPF sub, and it’s not hard to imagine a circumstance in which someone might wish to do so.
However the answer is pretty decisively no. Anything offering access to your pension before age 55/57 is scamming you.
These schemes operate by providing you with cash with “no upfront costs”, but then transfer your pension to a provider you have no access to, and invest in a single corporate bond of a company they control, which can’t be publicly traded or sold. Once locked in, you have no meaningful way to exit, and chances are that you will wind up with nothing.
Even worse, if HMRC suspect pension unlocking, they can levy tax charges against any pension funds that were unlocked of up to 70%, even if you don’t have access to the funds to pay the tax charge.
- 🔖 https://www.fca.org.uk/scamsmart has a useful quiz on whether a scheme you’re considering is likely to be a scam
- 🔖 https://www.fca.org.uk/consumers/pension-unlocking
- 🔖 https://www.unbiased.co.uk/discover/pensions-retirement/managing-a-pension/what-is-pension-release-or-pension-unlocking
Multi-level marketing (MLM) schemes
Also known as ‘direct selling’ schemes, ‘network marketing’ schemes, and… ‘pyramid schemes’.
Multi-level marketing schemes advertise themselves as a great way to earn a living flexibly and on your own terms. They’re often centred around selling a specific product, but whether it’s makeup, home goods, clothes, or wine, the product is just a facade to make the business feel legitimate. In fact the majority of people who join these businesses do not make any money. They put their own money into the venture, buying ‘introductory kits’ when they join, regularly buying additional stock to meet their quotas, and recruiting whoever they can to do the same. The money this generates gets funnelled up to the people at the very top, while the majority are left with nothing but piles of overpriced product they can’t sell.
These companies can be extremely predatory, and they are very well practised at deflecting common criticisms and concerns in order to get people in and keep them there. That is in fact what their real job is!
- 🔖 https://www.reddit.com/r/antiMLM/
- 🔖 MLMtruth.org master list
- 🔖 Elle’s #Poonique Story a (UK based) personal account that provides a lot of insight into how these companies operate
- 📺 Multilevel Marketing: Last Week Tonight with John Oliver (30 mins)
Broadly, ‘phishing’ is when a scammer pretends to be someone they’re not, in order to get you to reveal personal details to them, such as your name, address, contact details, banking details, and passwords or authentication app codes.
In order to do that, they could pose as:
- Someone you know personally, such as a friend or family member
- Someone from work, such as your boss, CEO of your company, someone from the accounts department
- Your bank, energy company, or phone company
- A well-known company such as Microsoft or Amazon
- A courier attempting to deliver a parcel
- The NHS track-and-trace service informing you of a covid exposure
- Your energy company offering you a rebate
- …Literally anyone they think you might believe legitimately needs personal information from you, or who you might need to make a payment to
These fakes can be extremely convincing. Scammers may have done research to find names of specific people in your life. They can also provide email addresses, web forms, login screens, online shops and so on which look legitimate.
It is worth taking the time to learn how to spot and avoid phishing attempts. Scammers send their texts, emails and calls out into the world by the thousand, so you will definitely encounter some.
- 🔖 https://www.actionfraud.police.uk/scam-emails how to spot and report phishing emails
- 🔖 https://www.itgovernance.co.uk/blog/5-ways-to-detect-a-phishing-email more in depth points to look out for
- 🔖 Real-life examples of phishing texts and emails collected by: Royal Mail, HMRC
- 📺 Atomic Shrimp’s 60 second scam videos cover phishing in: ‘You Have a Package’,‘Your bank calling’, ‘Give me the security code’
- 📺 Also by Atomic Shrimp, ‘What Happens If You Click On Links In Phishing Emails?’ (6 mins) including why you should NOT ‘hover over’ suspicious links to check them out.
Repeat and follow-up scams
If your (or your loved ones’) contact details have been captured in a phishing scam, you can expect the scammers to come back for a second bite, and to also sell your details on to other scammers to try their luck. If your information has been compromised, you should take extra care monitoring your bank accounts and correspondence in the months following.
Note that the follow-up scammers may even try opening with a line such as ‘hi, I’m from [your bank] calling about a recent suspicious transaction made using your account. Can I just ask you some security questions…’ because they know you’re half-expecting this sort of problem.
- 📺 ‘Scam Victim Story’ by Atomic Shrimp (10 mins) has an analysis of a phishing scam which included a couple of follow-up steps.
Call centre and ‘tech support’ scams
Someone calls, claiming to be from Microsoft/Amazon/the police/HMRC/your bank. They are lying. These calls originate from professional scam call centres around the world, and over the years they have developed sophisticated methods of operation, including several ‘scripts’. Common ones include:
- Your computer is infected with a virus, or has been hacked, and you need to pay them £x to sort it out
- Your bank account has been compromised and the funds need to be moved to a ‘safe’ account
- Someone has made a fraudulent purchase in your name and they’re calling to refund you
- You have been sent funds in error, and now need to send them back
Their first objective is to get you to provide remote access to your computer or mobile phone using tech support software. This allows them to snoop on what you’re doing, collect personal data about you, and even fake what you see on your screen or install malicious programs. The second stage involves getting you to fill in a form with your bank details, and/or to log into your online banking service.
Regardless of which ‘script’ they are running, and what amounts of money are being discussed, this scam does not stop at a petty amount of money – they will take as much as they can access, which could well be your entire life savings.
These scams particularly target older people and they can get really scary. Scammers use psychological manipulation, threats and intimidation, lying, blackmail, whatever it takes to get their target to do what they ask and not tell anyone about it. If you consider yourself tech savvy, it’s still worth familiarising yourself with these scammers’ tactics to help protect other people in your life who might be more vulnerable.
- 📺 ‘Call Centre Scams’ by Atomic Shrimp (1 minute)
- 📺 ‘Scam Interceptors’ series on BBC iPlayer (featuring real recorded conversations, and some excellent interviews with victims)
- 📺 ‘Who makes these scam popups?’ by Jim Browning (20 mins)
- 📺 ‘Inside a Tax Scam’ by Jim Browning (20 mins)
- 🔖 https://www.aarp.org/money/scams-fraud/info-2021/international-tech-support-scam-exposed.html a thorough and interesting article for a lay audience, from an American over-50s organisation
- 🔖 https://www.comparitech.com/blog/information-security/tech-support-scams/ a good overview on how these scams work if you want some technical detail
Advance fee fraud
These scams work by first offering you something really big, such as an inheritance, a job offer, or even just a great price on something you want to buy (or that they’re offering to buy off you). This may be done briefly, in a single email or message, or the scammer may spend hours talking to you and gaining your trust. Once they have convinced you that the opportunity is legit, they will ask for some sort of small upfront payment from you – an admin fee, processing fee, holding fee, delivery fee, or similar.
The amount is designed to be small enough that you don’t worry too much about paying it, especially for such a valuable opportunity. However in reality there was no such opportunity to begin with, just an elaborate excuse to ask you to send them money. And if you do pay it, they will find further reasons to keep taking money off you.
- 🔖 https://www.actionfraud.police.uk/a-z-of-fraud/advance-fee-fraud
- 🔖 https://en.wikipedia.org/wiki/Advance-fee_scam
Romance scams are a particularly elaborate and manipulative variant of the above. Scammers pose as potential romantic partners and develop a long term relationship with their victims, going to great lengths to build up trust and affection before asking for money. The financial and emotional effects of being scammed in this way can be particularly devastating.
- 🔖 https://www.bbc.co.uk/news/technology-55997611
- 🔖 https://www.scamwatch.gov.au/types-of-scams/dating-romance
Ebay, Gumtree and Facebook Marketplace sales
It’s all too easy for scammers to post fake ads, or reply to ads that you post. High value items will especially attract scammers.
Buying items: If you are buying from Facebook Marketplace or Gumtree, inspect the items carefully in person before paying the seller. Do not use Gumtree or Marketplace to buy items you cannot collect in person, as obviously this would require you to pay the seller in advance of them posting it to you – you are likely to never see the item. If you’re looking for something second hand and there are no good listings local to you, use ebay. Remember if the deal looks too good to be true, it probably is.
Selling items: You should always use the payment methods recommended by the platform. On ebay this is their own payment system – do not agree to use any other payment service.
On Gumtree and Facebook Marketplace where sales are conducted in person, the standard is cash upon collection of the item. Bank transfer is also possible, if you wait and verify that the transaction is complete in your own banking app (don’t take any email or text receipts you receive as proof, or anything they show you on their own phone, as all of these can be spoofed). Do not accept paypal, which permits the buyer to dispute the transaction and claw their money back, or more obscure transfer services which could also be faked.
If a buyer tells you they accidentally sent you ‘too much’ money, and then ask you to send the ‘extra’ back to their account, this is 100% a scam. You have not received any real money from them, they will simply take what you transfer to them and run.
Facebook and Gumtree are set up for in-person sales. If a buyer asks you to post the item to them, they are likely to be a scammer and the money will never arrive, only faked receipts. If they say they will send a courier with the money to collect the item (but you need to pay a ‘fee’), this is also a scam. Even if the buyer is genuine, if something goes wrong with the sale you won’t be protected using Gumtree or Facebook. If you want to sell an item online, list it on ebay not Gumtree or Facebook.
- 📺 How to Buy and Sell Used Items Online Safely by LoteTreeMedia (15 mins)
- 📺 Overpayment Scams by Atomic Shrimp (60 second video)
- 📺 How to avoid fake bank transfer Scammers buying your phone through Gumtree Facebook (5 mins)
- 📺 Facebook Selling (MoneySavingExpert)
Crypto hacks, phishes, rugpulls, ponzis, casinos…
The lack of regulation and consumer protections in the crypto space makes it an attractive domain for scammers, especially combined with the current levels of hype and crowds of people hopeful they can get rich quick.
Going into detail here would deserve a whole page in itself. We have provided some resources below to start your research.
- 🔖 https://web3isgoinggreat.com/ compiles scams, hacks, rugpulls, pyramid schemes, illegal activity and more in the world of crypto/web3
- 🎧 Reply-All episode about an NFT phishing scam (30 mins)
What to do if you’ve been scammed
Realising you’ve been scammed is a horrible feeling, and people are often reluctant to report it to the authorities or talk about it with anyone they know.
If this has happened to you please know that you are far from alone. Scammers are professionals, and they’re as good at their job as you are at yours. In fact even people who combat scams for a living fall for scams sometimes – it just takes the right scam to land at exactly the right (or wrong) moment to catch you out.
If you have been recently scammed, it’s important that you take any applicable steps to protect yourself from any further harm, such as identity theft and follow-up scams. You should then see if there’s anything you can do to get your money back. The guides below will walk you through the steps required to do this, and also how to report the incident.