Evolving scams mean no one can afford to let their guard down

The harsh reality is that it remains difficult to stay a step ahead of ever-evolving financial scams.

• New data by the Financial Conduct Authority (FCA) published today shows it has stopped 1 in 4 firms from entering this market.
• Between April and September last year, the FCA received 16,400 enquires about possible scams, up nearly a third from the same period in 2020.
• The top types of scams being reported to the FCA included cryptoasset, boiler room and recovery room scams.
• The FCA has also revealed that over six months, it opened over 300 cases relating to possible cryptoasset businesses not registered with the FCA, many of which may be scams, and that it has 50 live investigations, including criminal probes, into unauthorised businesses.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Any win over fraud should be celebrated, but the harsh reality is it remains difficult to stay a step ahead of ever evolving financial scams. The challenge is uprooting shady businesses and outright scam ventures before they have the opportunity to do harm to consumers.

“Fly by night operations are rampant in the crypto world. They lean on the popularity of cryptocurrency to draw in and exploit consumers. On top of the investment risks, investors don’t have the regulatory protections usually afforded to retail investors.

“The internet is a rich trolling ground for unscrupulous individuals to convince unsuspecting victims to part with their hard-earned money. Fraudsters are only too willing to exploit any ignorance or naivety. The challenge is for the gatekeepers of the internet (social media companies included) to protect users from harmful content. The upcoming Online Safety Bill in its current form does, to some extent, impose a duty of care on these companies, but whether it goes far enough is another matter entirely.

“The fact remains that it will take a colossal effort from the industry as a collective to plug the flood of financial scams.

“Financial scams have become a begrudgingly accepted part of everyday life, but consumers must remain alert to potential threats that come in all different shapes and forms. As well as a pounds and pence cost, falling victim to a financial scam has a broader psychological and emotional impact that can linger and cause distress well after the scam is over.

“Unfortunately, with so many fraudsters hiding in the shadows and escaping detection, the onus is on individuals to avoid falling prey to financial fraud – there is no getting away from it. We all need to be on our guard. The interactive investor Great British Retirement Survey last year found that only 34% of those who fell victim to a scam had received their money back. 56% had not had their money returned, and 11% were still waiting. People may be becoming more “scam smart”, and banks may be getting better at thwarting scams – but the responsibility for recognising fraud seems to be pushed increasingly towards the victim.”