Credit
Protecting yourself from financial fraud
A small number of habits prevent most fraud, and the tactics are consistent regardless of the story.
Fraud has become one of the most commonly experienced crimes in many countries, and it relies on psychology rather than on technical sophistication.
The tactics, which do not change
Recognisable regardless of the specific story.
Urgency: a deadline, a threat or an opportunity closing.
Authority: impersonation of a bank, the police, a tax authority, a utility or a delivery company.
Isolation: being told not to discuss it with anyone, frequently framed as a confidential investigation.
Fear or excitement, both of which impair judgement.
A request to move money to a safe account, which no legitimate organisation ever makes.
And a payment method with no protection: transfer, cryptocurrency, gift cards or cash.
Any of these should stop the transaction, whatever the explanation.
The habits that prevent most of it
Short and effective.
Never act on an incoming call, message or email requesting payment or details — hang up and call back on a number you have obtained independently, from a card or a statement.
Wait several minutes before calling back, or use a different phone, since some fraud relies on the line remaining open.
Verify payment details for large transfers by phone using an independently obtained number, particularly for house purchases where interception of solicitors' details causes enormous losses.
Use a credit card for large purchases where protections apply.
Enable two-factor authentication everywhere.
Use unique passwords with a password manager.
Freeze or lock cards when not in use.
And discuss anything unexpected with someone before acting.
The protections by payment method
Which differ substantially.
Credit cards generally offer the strongest protection, including joint liability provisions in some jurisdictions for purchases above a threshold.
Debit cards offer chargeback, which is a scheme rule with time limits rather than a legal right.
Bank transfers historically offered least, though reimbursement rules for authorised push payment fraud have been introduced or strengthened in several jurisdictions.
Cash, cryptocurrency and money transfer services offer essentially none, which is why fraudsters ask for them.
Which means the requested payment method is itself a signal.
Identity theft
A distinct problem.
Signs: unexpected credit refusals, unfamiliar entries on credit files, post for accounts you did not open, and missing expected post which may indicate mail redirection.
Prevention: shredding documents containing personal details; redirecting post when moving; checking credit files periodically; limiting information shared publicly; and being alert to data breach notifications.
Response: report to your bank, the national fraud reporting body and the credit reference agencies; consider protective registration; and write to each affected creditor stating the account was opened fraudulently.
Investment fraud
Where losses are largest.
Features: unsolicited contact; returns that are high and described as low risk; pressure to decide quickly; professional-looking materials; and difficulty withdrawing once invested.
Cryptocurrency, foreign exchange and unregulated bonds are common vehicles.
Clone firms use the details of genuine authorised companies, which is why checking the register and using the contact details on the register rather than the ones provided is essential.
Regulators publish warning lists of firms operating without authorisation.
And recovery fraud targets previous victims with offers to recover losses for a fee, which is a second fraud.
What to do immediately
Speed determines recovery.
Contact your bank at once, which may be able to stop or recall a payment.
Report to the national fraud reporting body.
Report to the police where appropriate.
Change passwords and enable two-factor authentication.
Check credit files.
Keep records of everything with times and reference numbers.
And do not pay anyone offering to recover the money.
Claiming reimbursement
The process.
Make a formal claim to your bank with a full account of what happened.
Where reimbursement rules apply, banks assess whether the customer met a standard of caution, which is the point of dispute in refused claims.
If refused, complain formally and escalate to the financial ombudsman or equivalent, which is free and which overturns a meaningful proportion of decisions.
Deadlines apply and matter.
Protecting older relatives
Where losses concentrate.
Agree in advance that nobody in the family will ever request money by message.
Register with call-blocking services.
Set up trusted contact arrangements with banks, which several offer formally.
Discuss specific current scams, since awareness of the pattern is protective.
Reduce unsolicited contact through mailing and calling preference services.
And respond without blame if it happens, since shame prevents reporting and reporting is what enables recovery.
General information only, not financial advice. Report fraud to your bank immediately and to your national fraud reporting body, and check firms on your regulator's register.
