How Scammers Can Ruin Your Family Finances

how scammers can wreak havoc on your finances
April 1, 2021 by Stuart Smale

The coronavirus pandemic across the world has caused many changes in how we run our lives. From how many people we meet outside to those who are struggling to find a new, or a first, job. Financial security of families is a really big concern.

According to statistics, about 730,000 people in the UK lost their jobs. This figure doesn’t include the number of people who also took pay reductions as the lockdown hit the UK economy. As a result, there are lots of families and individuals out there who are struggling financially and looking for solutions to protect them. A perfect breeding ground for scammers.

Scammers are very good at collecting money from their victims. They can look very legitimate and be persuasive; giving a sense of trust. Here are some of the ways that they’re using the current economic environment to gain access to money.

Credit Refunds

One of the biggest scams is promising a refund from a credit company. This can be done in several ways. First is by mimicking the credit company itself and saying that an error entitles them to a refund of so much. The second is by taking on the persona of a lawyer or charity and saying that they’re in a database of customers who may have been overcharged.

The scammers will promise to process the refund on their behalf if payment details are provided. Sometimes, the scammers will ask for an administration fee. There are some schemes which can allow for refunds; however, charities can sometimes provide these services for free.

Copycat Websites

Getting websites to appear on Google is a very tricky prospect. Businesses spend hundreds, if not thousands, on consultants to get their websites to the top. But if scammers are lucky, they can get copycat websites to the top of Google rankings, even for a short while, which can entice customers to provide financial details.

Copycat websites are those that look almost identical to those of the websites they’re copying. Banks, retailers and other financial firms are often cloned by criminals to get your information. If ranking on Google doesn’t work, then phishing emails or cloning Instagram accounts can sometimes be used to convince you to visit these sites and enter information.

Scammers did this to a beauty product business and then contacted contacts of the original Instagram account to ask for money. For the customer, it can be hard to determine the difference between the real and copycat profile.

Romance Scams

There has been, in recent years, numerous romance and lonely heart schemes where someone pretends to be an online romance/friend of a contact. At first they’re very kind and courteous. Then they start asking for cash for various reasons. Sometimes they’ll claim that they have a sick child or parent. Sometimes they claim because they’ve run out money.

This can sometimes be one of the hardest frauds to trace.

Fake Products/Counterfeit Products

There has been a significant rise in demand for health products like alleged cures for Covid-19 and face masks. Criminals are using this and selling them on places like eBay and Amazon for inflated prices but either send a product that is no good or don’t send the product at all.

While some stores can and will remove these products and sellers from their sites. The amount they take early on can be significant.

Credit Score Scams

Many consumers worry about their credit score. And this is an easy target for criminals. There is a current scam where ‘companies’ promise to provide your credit score with enough good karma so your score is repaired. This, they will claim, will allow you to take out more loans and claim better rates of credit.

However, there are no such real services. The best way to get a better credit score is to make your repayments on time, use your credit utilisation properly and only borrow what you can pay back.

Loan Fee Fraud

An ever increasing amount of people are falling victim to scammers pretending to be a legitimate loan company. They’ll take the details of an active authorised firm and phone victims promising a loan if an upfront fee is paid, safe to say the loan will never materialise once the fee is paid and often they’ll try to extract even more from victims saying there are other fees to pay.

Always treat unsolicited calls with suspicion. A legit loan company will never call you out of the blue offering you a loan.

How these affect your finances

These scams are a massive problem with finances. First of all, they can take money that can be better used to pay back credit that you’ve taken. The more you pay back at once, the better your credit rating will be.

Another thing it can do is worsen your credit score. Scammers can use your details to make credit enquiries in your name. The more enquiries that are made, the worse your score will be and this can make it harder for you to get credit or good rates on credit.

Finally, it can cause stress. It is hard for you to get the money back from these criminals. Some credit card companies might be able to refund you, if you report the crime on time. However, in most cases, the money is lost. This can cause additional stress.

How to avoid scammers to keep a good credit rating

To keep a good credit rating on your records you need to avoid scammers. So, here are some tips to avoid scammers.

• Don’t click on links inside emails from messages that are asking for payments or personal details.

• Always check the address that links send you to or are sent from. Criminals often use subtly different email address to convince you they’re legitimate such as amazon.co or amozan.co.uk instead of amazon.co.uk. While on their own, they look suspicious, with the right branding they can be convincing.

• Don’t make payments over the phone to someone who has called you (unless you’re expecting the call). If a bank/credit card company calls you, call them back by the number on the back of your card. You should also use a different phone as sometimes scammers can make you think you’ve hung up on them when you haven’t.

• Never send money via PayPal via friends and family, unless you know the person.

Conclusion

Scammers are there to take your money. This can have long lasting repercussions for your credit score and ability to get finance later on. Therefore, be cautious with how you interact with emails, social media and those who call you up. Speak to only those legitimate businesses that you’re confident and 100% sure of.

If a company calls you unexpectedly, call them back using the number on Google or on official documents you know are legitimate (not numbers via an email). By following these guidelines, you can prevent fraud, theft and the damaging of your credit score.

Is the managing director of Cobra Payday Loans and Ready Money Capital Limited. He is responsible for all the day to day functions and performance of both companies and regularly contributes information on the short term finance sector. Stuart is an approved person with the Financial Conduct Authority, holding SMF3 (Executive Director) status.

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