Allan is a Fellow of the Institute of Chartered Accountants and now specializes in helping people start up in business as you will read in Chapter 10. Previously Allan managed the Investigations and Recoveries Team at Investors Compensation Scheme (the predecessor of our current Financial Services Compensation Scheme). Allan’s work paved the way for millions of pounds of compensation to be paid to victims of endowment, pension and other financial mis-selling. Allan knows a thing or two about scams pulled in the past through this and other senior investigation roles and shares advice on how to safeguard your wealth.
Intelligent, honest people don’t fall victim to scammers, do they? Read on and save yourself, friends or elderly neighbours money, time and effort.
I first came across the scammers in 1984 on the Magic Bus returning from a backpacking holiday around the Greek Islands. The bus stopped somewhere in the mountains of Yugoslavia for a lunch break. Within minutes the local lads were out with three shells and a pea and launched into their game. All you had to do was watch them place the pea under the shell and spot it after they shuffled the three shells. Winners doubled their stake. My friend and I had no money at this stage of our holiday but we watched the locals take apart our fellow students, which included future doctors, lawyers and accountants. It enlightened me to a whole new world. Shills pretend to play the game to entice new entrants; lightning-fast sleight of hand then ensures novice players lose as the stakes get higher. Muscle then trails any unlikely big winner to retrieve the money through intimidation or theft. The concept has been alive and well for thousands of years. In simple terms, scammers have employed sleight of hand and a few back-up techniques such as vanity and knowing that folk never want to admit to being stupid. Many scammers are so good you will never spot what they have done in the same way as a good magician really will leave you believing that they made someone ‘float’ on stage. Smoke, mirrors, sleight of hand and anything can be made to look possible.
So how can we protect ourselves? First of all forget the ‘it could never happen to me’ line. I’ve lost count of how many times I’ve read a story and thought the victim should have known better and deserved what they got. The old saying that ‘a fool and their money are easily parted’ comes to mind. All those people who receive a cold call, for instance a telephone call or letter from someone they have never heard of, and then go on to invest in some wholly useless investment. However, quite often the victims are just like you and me but have encountered very professional scammers who have employed all their tricks, and before you know it a payment has been made. If it was as little as a few pounds you might write it off to bad luck and experience but what if it was a few hundred pounds, a few thousand, or even more?
My four ‘tests’ could help protect you.
The duck test
A respected Detective Superintendent summed up the duck test for me. The test flows from cutting short a debate over the identification of a duck and, out of pure frustration, is drawn to a close by ‘It looks like a duck, it walks like a duck, it quacks like a duck it is a (expletive deleted) duck!’. It’s a simple common sense approach – ignore the smoke and mirrors and sleight of hand – anything that is used to distract you from the real issue. Does it look, feel, and ‘smell’ like a scam? If so walk away, put the letter in the bin or put down the phone.
The Granny test
For many years I headed up the Investigations Teams in a major bank dealing with a financial adviser sales’ force of over 1,000. I remember walking into a sales force conference soon after I was appointed and meeting the advisers and their managers for the first time. Many I wouldn’t have let anywhere near my grandmother as they were commission driven and, in my mind, were likely to place the next sale (and commission) above the best needs of the client. My initial instincts proved true as we gradually had to oversee major programmes of redress and compensation especially around personal pension and endowment mis-selling. The message here is to trust your instincts, especially after you ask yourself the rather telling question about whether you would let the character you are dealing with anywhere near your mother or grandmother on the subject of financial advice. Instincts have been honed in the human species over thousands of years – if they have served you well in the past, trust them.
Actions speak louder than words
Scammers, generally, are all talk (unsurprisingly they very good at it) and no action. Delivering against what is said for any reasonable person should be easy to achieve. If the actions don’t happen just walk away and don’t give them a second chance to take advantage of you.
Too good to be true?
Scammers know that greed can get the better of many people and employ it to their purposes. If it sounds too good to be true, it is probably a scam.
Advance fee fraud
This is the scammer’s favourite and has been dressed up in a hundred different guises. The spine is remarkably simple. A payment is made by you with the promise of a bigger pay-out in return. Perhaps it is cloaked in terms of funds left for you by a mystery relative where you pay a processing fee of £50; then maybe you are asked to pay another release fee of £150 and on it goes with a promise of a £10,000 sucking you in (which, of course, you will never actually receive).
The surprise prize ballot win
There is usually a premium rate number to claim the prize and the ultimate actual prize is probably worthless or trivial. File anything like this under B for bin.
The new lover or someone showing you interest or attention who, and unremarkably, shows you the attention you crave just when you need it or are at a low point. Maybe then they need some money for a sick mother or child. Scammers can be very clever and know how to manipulate you to get the response they want. They usually want you to keep things ‘secret’ as they know any friend you confide in will tell you to run a mile. Sadly emotional involvement and shame prevent folk from acting rationally and the scammers know this. Smoke, mirrors, sleight of hand and, just like a magician, your money is gone before you know it.
Credit and bank card cloning
This can be the jackpot for the scammers but how can they actually get your credit or bank card? The cloning devices that they attach to a bank’s cash machine are not so farfetched these days – we had an incident in a nearby village only last month. But it need not be so far-fetched. How about the scammer who takes a temporary job in a holiday resort and clones the cards when their tipsy customer give over their credit card at the end of the night to pay for a nice meal out? You should never let your card out of your sight – restaurants will always bring the credit card machine to you (or you go to it). The end of this story? The holiday season finishes and the scammer moves on to activate and plunder their season of cloned cards.
If you spot a scam or have been scammed, report it and get help. Contact the Police’s Action Fraud team on 0300 123 2040 or online at www.actionfraud.police.uk or the Police in your area.
Keeping safe from telephone cold calls and e-mail scammers
The above examples are just some of the higher profile and potentially higher value scams but there are many more. Some you may encounter over the phone and internet on a weekly basis.
Cold callers on the telephone can be irritating at best and sometimes downright scary as they may not take no for an answer. My own phone rings again and there is a temporary silence then a click and then the buzz of chatter in the background. It’s yet another cold call from some overseas country that I really don’t want to receive. The way these calls are intruding into our life is becoming a real problem. I therefore kept a log of the most irritating calls over a fortnight to try and understand what these people are after and what you, in turn, can do about it.
‘Good afternoon it’s John from UK Lifestyle Survey.’ I ask where he is calling from. ‘I’m calling from India,’ John says and cheerfully explains that he is representing UK leading energy suppliers and wants to know who my energy supplier is. I say that I am not prepared to say and he puts down the phone. These calls are just seeking to gather marketing data from you. Who you buy from and where you live and the data is usually sold on and you will be bombarded with more calls and literature after you are put on their ‘suckers list’.
‘Good morning we are opening a home improvement shop in the local area and we would like to send you a £1,000 voucher. Would you like to spend it on improving a kitchen or bedroom?’ I have to admit this is a great opening line and I’m intrigued but then sanity prevails as the ‘voucher’ will be no different to the discount I could negotiate when someone comes out to measure up and quote for a new kitchen, bedroom bathroom etc. Again these calls are just seeking to gather more marketing data and replying will just cause more and more calls. Interestingly this call is from the UK and I use the magic words ‘I am signed up for the Telephone Preference Service and you should not be calling this number’. However the answer came back that they had a note that I had agreed to receive such calls and they now wanted to send me my voucher. I explained that they could keep their voucher and for the avoidance of any doubt they were to record that the telephone number they were calling was registered with the Telephone Preference Service and any previous authority was withdrawn.
The Telephone Preference Service (TPS) is a free service. It is the official central opt-out register on which you can record your preference not to receive unsolicited sales or marketing calls. It is a legal requirement that all organizations (including charities, voluntary organizations and political parties) do not make such calls to numbers registered on the TPS unless they have your consent to do so. You can register your phone number with the telephone preference service by calling 0845 070 0707 or you can do this online at www.tpsonline.org.uk.
I was waiting for one of these types of calls and in it came. Possibly the most sinister of the lot. ‘Good morning, your computer has reported a fault to Microsoft’, and they went to explain that they were calling to help me fix it. Apparently they had ‘received an error report from Windows’ and in a fanfare they championed ‘we are Microsoft certified’.
‘Please turn on your computer and check…’. I had to intervene at this point as a good friend who works in IT had warned me about this lot. ‘They are after access to your computer and it is like walking up to a stranger in the street and handing them your wallet’ was his simple and straightforward advice. After a moment’s reflection he added ‘No, it’s actually worse than that’.
Basically these guys are scammers and they take you through a very basic procedure that reveals an error code and they use your non-knowledge of IT to make you feel vulnerable. At best they then get you to sign up for a maintenance package which, they say, will improve the performance of your computer. At worse they will gain access to your computer and leave spyware/software on it to collect data such as bank and other passwords and the like and you can imagine where this story will lead.
‘So where are you based?’ I asked the plausible but foreign sounding lady. ‘I’m based in London at Buckingham Palace Road,’ came the reply. ‘And what tube line did you use to get to work this morning?’ I enquired. But this caller was determined and dodged my cheeky question and requested ‘Can you turn on your computer and check for…’
My final pick from my fortnight of engaging with the cold callers was ‘Sasha’ from The Consumer Centre which, she fanfared, acted for leading UK businesses and charities (I will not name the firms she said she was representing but they are all highly regarded names who I imagine would run a mile from Sasha and her colleagues). I asked where Sasha was calling from. ‘The Philippines,’ came the reply and Sasha moved on to explain her survey would not take long. Intrigued I gave it a go for a few minutes. ‘Please confirm your address?’ I said I didn’t want to confirm my address. ‘What age are you?’ I said I didn’t want to reveal my age. ‘What TV make do you have?’ I said I did not want to reveal my TV make. And so it went on until I said that this was just a call to get marketing data on me that they would sell to other firms and I would get even more calls. I said that I wanted to complain and stop Sasha and her colleagues calling me. Then came the sinister bit as Sasha informed me that ‘the only way we will stop calling is when you complete our marketing survey’. I restated that I wanted to complain and Sasha gave me a telephone number. I called the number and there was no answer – it was a dead line/or non-number. Subsequently I have learnt that some complaints lines for these cold callers are apparently premium rate numbers so they get you that way.
In summary, the first and most important learning point is to sign up for the TPS. Its powers in dealing with overseas callers are limited to information sharing with overseas authorities. However, armed with feedback from you they may be able to bring some pressure to bear on the way these overseas firms are intruding on our privacy and then preying on the elderly or naive. The TPS can definitely assist if UK-based callers are making nuisance marketing calls. The advice on overseas callers is just to state ‘I am a member of the Telephone Preference Service and you should not be calling me. What is your name, where are you calling from and what is your telephone number’. Do not engage in any other conversation and then consider passing on the three facts to the TPS. In addition, new technology allows you to acquire telephones that display the inbound number and, even better, block certain numbers. This may be worth investing in if you or an elderly relative are plagued by such calls.
E-mail scammers
The ingenuity and creativity of the e-mail scammers is reaching new heights. In simple terms, someone somewhere has gathered thousands of e-mail addresses including yours and mass mails them with a piece of information designed with only one purpose in mind. That purpose is to gain your attention and engagement. All end up the same way which is you losing out. I see a few e-mails every week from my clients as they have apparently been offered a refund from HMRC or their bank is offering them a refund. The e-mail tells them that all they have to do is click on a link and then follow the instructions. These instructions usually end with you entering your bank account, credit card or paypal details to enable the refund to be processed. The quality of the websites you link to are usually convincing with lots of branding and official looking information. Unfortunately the reality is that they have been built by scammers and they want to steal your money. So never click on any refund links and always check with the organization directly. For instance HMRC advise that: ‘HMRC will never ask you to provide confidential or personal information such as passwords, credit card or bank account details by e-mail. If you have received an HMRC related phishing/bogus e-mail, please forward it to the following e-mail address and then delete it: phishing@hmrc.gsi.gov.uk.’
Remember that many websites are not legitimate. Generally try to protect yourself by restricting yourself to known organizations and their websites. If it is a UK business they must clearly show the company or business operating the website (usually in the contact us or about us section) which you can then check out.
The other trigger that may help you spot a fraudster e-mail is that they usually want you to act immediately. At one point last year I began to think that I had a pretty unlucky bunch of clients as a few have been mugged while abroad. Apparently their mobile phone had been stolen but they had access to e-mail and needed me to urgently wire £500 until their credit cards had been cancelled and reissued. Recognizing the scam I usually telephone my clients. ‘How are you?’ and everything was, of course, fine. To cut to the end of the story e-mail accounts were hacked and the scammers had sent out £500 requests to every person on the client’s e-mail address book. Coming from real e-mail addresses it had all seemed plausible but, as I say above, the ingenuity and creativity of the e-mail scammers is reaching new heights. On this point you should think about changing e-mail account passwords to a long weird password with a mix of characters and numbers. Passwords like ‘Password123’ or ‘Letmein’ or your name spelt backwards are ripe for picking off by the hackers.
Keeping your investments and savings safe
Always check that any proposed investment and the person giving the advice is regulated by the Financial Conduct Authority via www.fca.org.uk and their register of authorized firms or their consumer helpline on 0800 1116768. If the investment fails and the firm is insolvent, the maximum that the UK safety net, the Financial Services Compensation Scheme, pays is £50,000 per person per firm.
The UK’s depositor safety net, the Financial Services Compensation Scheme, safeguards savings and bank deposits of up to £85,000 per person per institution. Remember some UK banks run several different savings brands under a single licence and savers with money in these different accounts will only be protected up to the single limit.
More on the Financial Services Compensation Scheme including what is covered and how to make a claim can be found at www.fscs.org.uk.
Complaints and ‘how to complain’
Things in life inevitably go wrong and sometimes you lose out when it was not your fault. It is always satisfying when you explain your complaint and an organization says: ‘We are terribly sorry for the inconvenience we have caused you. Thank you for taking the time to set out your concerns. We have now fixed the issue and it will not happen again and we would like you to accept a bunch of flowers as our way of saying sorry.’
This sort of response is rare and I personally find it irritating the way more and more companies hide behind websites and it is almost impossible to find someone to talk to. Perhaps some businesses will see the benefit of reverting to decent two-way communications. I think that many consumers are willing to pay that little bit more for some decent service and the assurance that when something goes wrong there will be someone there to do something about it. Perhaps that is one of the reasons for the success of the John Lewis Partnership?
While the Good Retirement Guide’s campaign for better customer service continues, my hints and tips on complaints might just help you get a better outcome:
I hope this chapter tunes up your ability to complain more effectively. There is some further help available for free at the government-funded ‘The Money Advice Service’. I would recommend their booklet Making a complaint, which is available at www.moneyadviceservice.org.uk or on the Money Advice Line at 0300 500 5000.
Our top four recommendations for further help, guidance and support on scams and complaints follow: