Advance fee scams

Cases of "advance fee" scams where a victim is asked to pay an upfront fee for products or services jumped by more than 80% last year, with victims losing £711 on average, according to one High Street bank.

In addition to these kinds of scams related to products and services, reports of loan fee scams have more than doubled over the past year, up 105% compared with the previous year. Cases continue to rise sharply. The average amount lost by victims in loan fee scams last year was £214.

Fake ads for loans, jobs and rental properties are among the most common tactics currently being used by criminals.

If it seems too good to be true, it probably is

Scammers engage in social engineering, where they use a variety of emotions in order to manipulate victims into parting with their money. They’ll often talk about an ‘incredible opportunity’, which will lead to you being able to borrow, or even just acquire, a large sum in exchange for a relatively modest amount.

The scammer will use a sense of urgency, suggest the offer is time limited and you “must act now” to secure the opportunity. Their aim is to rush you into a decision without really considering how legitimate the opportunity really is. But of course, the opportunity never materialises, the victim has paid the scammer a sum and the scammer disappeared.

How to spot an advanced fee scam

In last week’s blog we wrote about the example of a scammer asking for £3,000 to be sent to a vault in Ghana so that 16 gold bars could be released. That’s a kind of advanced fee fraud.

Some of these scams are easier to spot than others. For instance, many people have received one or more emails apparently from, for example, the widow of a senior government minister in a far away country who has millions of pounds or dollars they need to get out of the country, and they have chosen you to help, as if it’s your lucky day. They just need access to your bank account so you can pay a fee to show your commitment and they promise if you do that, they will pay millions into your account and you will be able to keep a large sum for yourself.

But other advanced fee scams are simpler and some are more sophisticated. If the scammer has done their homework and they’ve got some of your personal data, they can be pretty convincing. They may at first appear to be from an ‘official’ organisation such as an energy company for example, offering a promotion to catch your interest.

If you get an offer, whether by phone, text or email, just take a moment and remember that free cash is very unlikely to be real.

Signs to watch out for

• If you’ve been contacted out of the blue by text, email or phone and offered a loan
• If you're asked to make an upfront payment to a bank account, or to make a transfer using an unusual method
• If you’re put under time pressure to pay the fee quickly
• If you make a first payment, sometimes the scammer will contact you again to ask for more payments before they can give you the loan
• Even though you make the payments, you never receive the loan.

Remember, if there’s an email or other communication asking for a fee upfront, it’s a strong indicator that it’s an advanced fee scam.

In a recent study, people living in more deprived areas of the UK were twice as likely to fall victim as those in less deprived areas, as more deprived areas accounted for over 70% of all advance fee scam cases.

Targeting the vulnerable

People under pressure of debt and the UK’s cost of living crisis may be more vulnerable to advance fee scams. Fake ads attract victims with promises of ‘fast loans’, usually from companies they've never heard of, or a scammer impersonating one they have.

Promises are made that the loan will get approved regardless of credit history or previous issues with debt. The scammers ask for a fee that they say is refundable and will be used as a deposit, administrative fee, insurance or simply because of bad credit history. But of course the loan is never received.

The scammers are completely ruthless and have no qualms about putting vulnerable people under even more pressure and stealing the little they have.

Will the bank repay me?

Many of the UK’s most well known banks opt in to a code, the ‘Authorised Push Payment Scam Code’. If a bank is signed up to the code, it must reimburse APP scam victims even if they’re not to blame - this also applies if the bank has done nothing wrong.

In many cases, the banks will reimburse money lost, so long as you uphold your side of the code, which means you’re expected to:

1. Pay attention to warnings given to you by your bank - these might be instructions or messages when you set up, change or make payments.

2. Have a reasonable basis for believing that:

• the person you paid was the person you were expecting to pay
• the payment is for genuine goods or services
• the person or business you are paying is legitimate

If your bank did everything it’s supposed to according to the code, but you didn’t, you probably won’t get your money back, although your bank might offer you some sort of compensation.

These days, most banking apps will make you go through a series of checks to make sure you’re really certain about what you're doing. The banking app will come up with warnings and questions, for example “has anyone put pressure on you to make this payment?”. It’s best not to ignore these warnings and to ‘take five’ to think about it.

Confirmation of Payee was set up as a way of giving you greater assurance that their payments are being sent to the intended person. This enables you to check that you’re making a payment to an account where the name matches correctly. If the name and account number don’t match, it’s a red flag.

Despite these protections, all too often, people push through the payment, only to find that they’ve been scammed and their bank saying, “we tried to warn you” and not repaying the stolen money.

How to stay safe

As a general rule, if you receive unsolicited communication, it's a sign it could be an advanced fee fraud’s opening gambit. So if you get an email out of the blue, check the source very carefully and navigate yourself to the organisation's website - don’t use any links in the email, type the url into your browser yourself. Navigate to the company website yourself. One way to check whether the link is genuine is to put your cursor over the link, but don’t click it. The true destination will appear.

Scammers are often lazy or stupid and make foolish errors in basic spellings or grammar. The scammers are betting that you receive so many emails, perhaps you won't pay close attention to theirs and get tricked.

In the case of loan scams, genuine lenders will always carry out thorough credit checks before they will agree to a loan and won’t ask for an upfront payment before releasing the funds.

Get control of your data

Before a scammer can try and expose you to an advance fee scam, they must have some information about you. The trickiest scams are when scammers have just enough data to be able to email or call you and convince you that they really are from an ‘official’ organisation. If they can do that they are halfway to conning you.

So if they can’t get that data about you, it’s much less likely that you will get scammed. Simply, if they don’t know anything about you, it’s much harder for them to target you.

Scammers get personal data in many ways, but quite often as the result of data being hacked or stolen in data breaches. Millions of data records get sold on the dark web, and that could include your details, stolen from an unsuspecting company that has your information in its servers.

To reduce the chances of your data getting into the hands of scammers, you should get it deleted from any organisation that no longer needs it. You can get your data deleted from any company, in a single click, by using Rightly Protect. Our service is quick, simple and free.