‘Get rich quick’ investment schemes are on the rise and
have seen would-be investors lose thousands of pounds.
An advance fee scam occurs when an individual is promised something of high value (such as impressive investment returns) for a fixed fee upfront; the victim coughs up the cash, but the returns never materialise.
Often, the scammer will request further cash instalments to pay for ‘extras’ such as admin or ‘sign up’ fees. The victim ends up paying thousands – if not tens of thousands – of pounds to free up something that doesn’t exist. Nottinghamshire Police claims that it received almost 100 cases of such scams between May and July 2023, and the numbers are increasing monthly.
Some examples of advance fee scams the force has seen include:
- A victim lost £24,000 to a cryptocurrency scam she saw advertised (falsely) using Money Saving Expert Martin Lewis’ endorsement. She filled out a form and was subsequently contacted and told to pay a fee for an adviser’s help with the investment – the adviser did not exist.
- An elderly couple lost £56,000 – also to a cryptocurrency scam – as the ‘adviser’ who contacted them had been ‘very polite and persuasive’.
Scammers are not one trick ponies either and they like to switch up their tactics; advance fee scams can also come in other forms, such as:
- Finding a ‘loan’ provider that will lend you money where other banks and services refuse (for poor credit scores, etc) but require an ‘administration fee’ to cover insurance.
- Unsolicited contact from an inheritance lawyer who has been instructed that their client has left you a sum of money but, again, they need money upfront to cover fees.
- Recruitment or employment scams in which the victim is told they need to transfer money to the firm to cover equipment or onboarding fees, or where the telephone interview takes place on a premium rate number. The job does not exist, and the money is lost.
In all of these cases, if any unsolicited firm, service, or adviser requests money ahead of providing any service, proceed extremely carefully. Carry out due diligence: research the details thoroughly, look for online reviews, search the company or contact alongside the word ‘scam’, all of which will often provide vital information as to whether the opportunity is legitimate or if others have been burnt.
When a scammer convinces a victim to willingly transfer money out of their bank account – either by bank transfer or card payment – for a product or service that the victim believes to be legitimate, this is known as Authorised Push Payment (APP) fraud.
Many advance fee scams involve an element of APP fraud, as the scammer has successfully manipulated the victim into believing that they are genuinely investing in cryptocurrency, accessing an inherited lump sum, or applying for a well-paid job. It is only after the final product does not materialise that the victim realises that they have been scammed, by which point the money has been moved on – often overseas – and proves virtually impossible to recover.
The first thing a victim of an APP scam should do after they realise what has happened is to inform the police via the Action Fraud reporting service and report the scam to their bank. The bank should investigate the scam, and, in some cases, this will be sufficient to recover the funds.
However, some banks may be reluctant to reimburse, placing the responsibility for the loss on the customer and refusing compensation. This is not the end of the road for recovering money.
Banks in the UK have a responsibility to their customers to have policies, systems, and procedures in place to detect and prevent financial fraud by:
- Monitoring customers’ accounts, particularly those vulnerable to fraud or scams.
- Providing effective online and mobile banking warnings to customers to make them aware of scam tactics.
- Detecting suspicious activity on customer accounts and delaying or stopping transactions until they have been investigated.
- Using industry intelligence to prevent fraudsters from creating bank accounts for scams, money laundering and financing terrorism.
In a growing number of cases, banks have been found to have failed in their responsibilities to protect consumers, resulting in scammers gaining access to significant amounts of victims’ money. If a victim believes their bank was negligent in protecting their money from scams, their complaint can be escalated, for example to the Financial Ombudsman Service (FOS).
Where a bank has not provided sufficient safeguards resulting in the customer losing money to an advance fee APP scam, there is the option to take the complaint to the Financial Ombudsman Service (FOS).
FOS is an independent, Government-endorsed body responsible for investigating and adjudicating disputes between financial institutions and consumers, both business and individual.
TLW Solicitors’ dedicated Professional Negligence team has many years of experience dealing with FOS and successfully claiming compensation for clients, even where they have previously taken a compensation case to FOS and been unsuccessful.
Sarah Spruce, Head of the APP Fraud team at TLW Solicitors commented:
“These findings by the Nottinghamshire Police force echo what we have seen from our clients across the country; victims are being fed claims to ‘get rich quick’, earn ‘high returns’ or even land an ‘amazing job opportunity’ and, in the current cost-of-living crisis, those opportunities can prove too attractive not to go for. Victims end up embarrassed and out of pocket.
Firstly, do not feel embarrassed; you are not alone! And secondly, there are people who can help – like my team. Get in touch today, and we will explore your options.”
If you, a friend or a loved one has been wronged by a financial scammer, then please get in touch with our specialist team for a confidential, no-obligation discussion.
We work on a ‘no-win, no-fee’ basis, so you pay us nothing if your fraud refund claim is unsuccessful.
Call us on 0800 169 5925 or complete one of the forms below.
Time limits can apply, and so anyone wishing to bring a claim should do so without delay.
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