Online financial scams you should know about

By Marianne Curphey


Brits love online shopping. Case in point: according to figures from the Office of National Statistics, online sales increased by 19.5% between March 2016 and March 2017.

Unfortunately, as the proportion of internet shopping increases, so do scams.

NatWest has revealed that nearly 7,000 of its customers have fallen for serious scams since the beginning of this year. According to Action Fraud, the UK's national reporting centre for fraud and cyber-crime, the average holiday scam cons consumers out of £1,200.

What are some common frauds, how can you avoid the risk of these scams, and what happens when even your best efforts fail and you lose funds?

Common online scams and how they work
The most common and serious online scams the bank has identified are:

  • Goods not received/advance fee fraud - Paying for services or goods that never turn up or that do not exist.
  • Spoof payment requests/invoice fraud - The customer receives a fraudulent request or invoice, usually at work, claiming to be from senior personnel or clients, for payment or draw down of funds. Or, a seemingly-real firm requests immediate payment for a fee, service, etc., via email.
  • Holiday scam - You book a holiday online, only to find out later the holiday deal was not real.

Fraudsters most often use two popular tactics to trick consumers: fake websites and direct messages to get you to send money.

With the former, your bank or other seemingly-genuine firm sends you an email or even a text message stating that you owe an immediate fee for something. The reason varies depending on what the company is; it could be a late fee, a parking fee or even a legal fee.

You may also use a legitimate website, then receive false correspondence from a fraudster who has hacked the site on the other end. For example, this has happened to consumers on sites such as Airbnb. They'd book a stay, then receive a private email asking them not to pay through the website, but to make a bank transfer to a personal bank account for a room that didn't exist.

How to avoid being scammed
"We have hundreds of people working 24/7 to detect and stop fraud, but it's very important that ... we know how to protect ourselves," Les Matheson, NatWest CEO of personal and business banking, said in a press statement.

Danielle Clements, consumer law solicitor at Gorvins Solicitors, a legal advice firm, says you should always verify that a website is genuine, especially if you are sent a link to it via email.

"A site may look genuine but could have been set up to steal your money or identity," she says.

Even if the website has your bank's (or any bank's or firm's) logo on it and looks legitimate, it can still be fake.  Check whether a site is safe by checking if there is a padlock symbol in the address bar. The web address should begin with https - the "s" stands for secure.

If your bank (or any company) ever emails you requesting funds, the best thing to do is call your bank and speak to a customer service representative about the issue, rather than clicking links and doing everything online. Use a customer service number from the company's real website, rather than one listed in the same email, as a fraudster may have put a fake number in the email as well.

Most reputable companies will not contact you via email for payment with no other explanation, Clements says. "If in doubt, speak to the company first and do not enter your personal details on the link to the website provided."

If you're on a genuine site and it requires inputting your personal details to secure your holiday or goods, be sure to follow any rules listed on the site. For instance, Airbnb has a guide for customers to help them stay safe, and most websites that require you to pay through that website will have some basic rules and guidelines for consumers.

"You should always follow the directions given by that site for payment to avoid any fraudulent activity and not to individuals directly," Clements says.

Other tips via Action Fraud include:

  • Check the web address is legitimate and has not been altered by slight changes to a domain name - such as going from to .org
  • Do a thorough online search to check the company's credentials. If a company is defrauding people, there is a good chance that consumers will post details of their experiences, and warnings about the company.
  • Be cautious if you're asked to pay directly into a private individual's bank account. Paying by direct bank transfer is like paying by cash - the money is very difficult to trace and is not refundable. Wherever possible, pay by credit card or a debit card.
  • Study receipts, invoices as well as terms and conditions. Be very wary of any companies that don't provide any at all.

What if you're scammed anyway?
You can be cautious and follow rules, but card scams can still happen to you. If it does, your credit and debit cards come with some protections.

Your credit card provider can make a claim on your behalf for the return of any money over and above £100. The protection, known as Section 75, protects you when you pay for goods by credit card, and the goods turn out to be faulty or do not arrive.

Debit cards have a different form of protection, known as chargebacks, which covers purchases under £100. However unlike Section 75, the chargeback scheme is not enforced by law, so your credit card is still the better choice.

The best protection: stop and think
Holly Andrews runs a commercial finance company, KIS Finance, and says she and her colleagues are regularly targeted by fraudsters, usually via email. For instance, she said she once received an email with an offer for an M&S voucher that required all of her personal details, and another that claimed she was one of several staff members with outstanding parking fines.

After considering for a bit, though, she and her colleagues were easily able to identify the emails as scams.

"When you stop and think about it, how would they get your email address even if you had parked in the wrong place?" she says. Or why would a co-worker be invoicing you, or your bank be demanding immediate payment?

"People panic, but if you pause and think, you realise it is a load of rubbish," Andrews says.

See related: What is SIM card fraud -- and how can you avoid it?, What are banks doing to protect consumers from fraud?, How the fight against fraud impacts card users

Published: 17 May 2017