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How to spot a financial scam

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A scam' is a slang term used to mean personal fraud. This usually comes in the form of a communication that convinces us to part with our money to claim a reward or help someone in trouble.

We've all been affected by a scam at some point in our life, though fortunately most of us do not respond. However, what might be obviously a scam to one person, may seem like a perfectly genuine communication to another. It's a huge problem. In fact, an estimated £10 billion is lost each year in the UK by scam victims, with older people and those with mental health issues most vulnerable to being scammed.

It is critically important to educate yourself and those around you (particularly vulnerable people) about what to look for, and what happens if you fall victim to a financial scam.

What to look for: the common money scams

A financial scam can come in all shapes and sizes, by email, by post, and sometimes even in person. In addition to the infamous Nigerian Prince scam, there are several other common themes to look out for:

Prize draws/lotteries

You will receive a letter (by post or email) informing you that you've won a cash prize, and you need to call a number to claim it.  This number is a very high rate premium line.  No genuine lottery or prize draw will charge you to receive a prize.

Unclaimed inheritance

A financial scam can look fairly sophisticated, using the names and addresses of real law firms. If you are told you have been left some money in a will, look up the law firm's real number online and telephone them that way.

Sob story

These letters will usually be in a friendly but pleading tone, asking for money to help them get through a difficult situation. It could be a family member having an operation, or loan sharks threatening their lives, or a similar tale that invokes sympathy from the reader.

Pyramid schemes

If it seems too good to be true, it probably is. Offers of no-risk investments or buying products that are guaranteed to sell at a profit are usually pyramid schemes and will simply result in you losing money.

Clairvoyants and Psychics

These scams from so-called clairvoyants offer apparent information about your future, and of course, you must pay to receive this information. You will either have to call a premium rate line or send money.

How to minimise scam risk

It's a good idea to minimise the possibility of being scammed by taking the following actions:

  1. Don't put your email address into unknown websites, they may sell your data onto scammers
  2. Join the Royal Mail's Mail Preference Service
  3. Put a no junk mail' sign on your door
  4. Be careful when disposing of confidential documents,
  5. Ensure online sites you use are reputable and secure.
  6. Remember, as before: if it seems too good to be true, it most likely is

What to do if you've been scammed

First things first - don't be embarrassed. Scams are clever and are constantly evolving to better fool people.  You're not the first to be scammed, and you're certainly not the last. Take the right action and you can prevent this from happening to someone else.  

Gather all of the information together to form evidence should you need it. Keep copies of letters and records of phone calls, along with any names, numbers or addresses involved.

Contact Action Fraud, a facility set up by police to help people and businesses who have been scammed, and report what's happened to you. The Scam Marshalls network is a National Trading Standards Scams Team initiative - it has lots of advice, and you can sign up to try and prevent scammers from continuing to operate. You can also seek legal advice to check if the scammers have potentially broken the law.

Steven Judge

Steven Judge is a Partner, Solicitor and Head of the Dispute Resolution Department and can be contacted on 01323 434416 or by email

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