Stay alert to new kinds of fraud during Covid-19

Fraudsters are preying on people’s fear during the global pandemic, so protect your business and your clients.

There’s been a spike in fraud across the UK in recent months as criminals have taken advantage of people’s fear to con them out of their hard-earned savings, with scams designed to exploit our current vulnerability. Reports of fraud jumped 400% between February and March according to Action Fraud, and 160,000 suspect emails were reported to the National Cyber Security Centre in the first two weeks of its new reporting service launched in April.

They target the elderly, the ill and bereaved, but also businesses, homebuyers and those who are ordinarily cautious when it comes to their finances.

In the midst of a health crisis, fraudsters understand that people aren’t always making rational decisions.

New scams

The fraud prevention service CIFAS now has a dedicated Coronavirus fraud section on its website and compiles a weekly list of new scams and there has been a constant stream of cons over the lockdown period, including:

  • HMRC Job Retention scams, where fraudsters are attempting to take advantage of the scheme by targeting business owners with phishing emails purporting to be from the HMRC, and asking for your bank account details. Always make sure emails requesting financial information are legitimate and from a trusted sender before you take action.
  • Emails purporting to be from government bodies or other institutions, such as banks or financial organisations, offering Covid-19 business loans, and from a supposedly legitimate sender address. CIFAS noted it’s difficult for an ordinary internet user to identify a fake sender from a real one.
  • Bereavement scams, where a scammer pretending to be a debt collector calls relatives and friends of people who have recently died and says they are responsible for their loved one’s debts. The scammer will then pressure them into offering financial details.

What should you do to protect your business and your clients?

Be mindful of the fact that fraudsters are trying to exploit the current upheaval, and always ensure that you consider the potential of fraud.

You probably have anti-fraud measures in place for your business but remember that you have to transfer those robust processes to a homeworking environment if you are working remotely.

Some fraudsters are targeting homeworkers specifically, so be particularly cautious of impersonation emails - for example, fraudsters impersonating CEOs or IT departments asking employees to move funds, send banking information or security information via email.

There’s also been cases of fraudsters impersonating Wi-Fi providers and threatening that customers will be disconnected unless they pay a fee. And of course, make sure your security settings are up to date on all your devices at home.

Don’t forget mortgage fraud

As well as new types of fraud, individuals and businesses could be more susceptible to existing scams, as fraudsters take advantage of the fact that everyone is worried and potentially distracted.

Criminals know that some people might not be as vigilant as usual in spotting fraud, especially if they are using different software at home.

The main type of fraud you are likely to encounter as a mortgage broker include:

  • Clients trying to get a larger mortgage by lying about their income. They could give you fake payslips or doctored bank statements to support their inflated earnings.
  • Criminal gangs working with fraudulent introducers, solicitors, accountants, or valuers. From taking out more than one mortgage on a property to borrowing in false names or overvaluing a property, these scams are big business and continue during the current crisis.
  • Conveyancing fraud involves your client getting a fake email from a fraudster pretending to be their own solicitor. They are then tricked into transferring money from their bank account to the fraudsters, perhaps even the full deposit amount.

Best practice

When it comes to fraud, knowledge is power, so be sure you’re up to date and compliant with all the rules, including checking ID, anti-money-laundering measures, reporting fraud and record-keeping.

You can refer to the FCA’s Guide to Financial Crime for more information or if you’re an appointed rep, contact your network for compliance support.

Always sense check what your clients tell you. If their earnings seem out of keeping with their job and experience, look into it, and if their property value seems inflated, check that too. And of course, look carefully at all documentation to spot any counterfeits.

Remember to check out any new introducers before taking referrals, especially in the current climate. Do your due diligence and check their credentials.

Finally, double check all applications and cross-reference with the documentation to make sure nothing is inconsistent or out of place. Spending 10 minutes pre-submission can save a lot of wasted time and trouble down the line.

It’s a challenging time for brokers and we are all distracted by health concerns as well as business worries. But that’s exactly what makes us more likely to be victims of fraud, so keep your guard up and remind your clients to be vigilant.

In what continues to be a very challenging time for us all, we hope you, your families, colleagues and customers stay safe. Virgin Money is passionate about supporting intermediary partners. For more useful insight, check out our website or talk to your Business Development Manager.

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Date published: 12/06/2020