The terrifying increase in fraud over the past year has resulted in a huge emotional fallout, too. Anna Moore meets women who lost their life savings – and their confidence – after becoming a victim to scammers, and asks: what can we do to fight back?
In February, during our third national lockdown, Alice Allen was isolated in rural Somerset with her husband. Her work as a drama therapist was now carried out over the phone. Her three adult sons were keepingtheir distance – with young children of their own, they didn’t want to pass Covid to their parents. Almost one year into the pandemic, Alice was weary, anxious and separated from many of her support systems – her family, friends and colleagues.
One evening, around 9pm, her phone rang. The caller explained that he was from the Lloyds Fraud Department – Alice banked with Lloyds – and that some of her accounts had been illegally accessed. They were handing the case to the Financial Conduct Authority (FCA).
When the FCA agent called, Alice asked how she could be sure he was genuine. ‘He told me to bring up the FCA website, then check its phone number against the number showing on my phone,’ says Alice, 70. It all matched. ‘I’d never heard of “number spoofing” – falsifying your caller ID,’ she says. ‘I felt fairly sure I could trust them.’
This agent told Alice that they were investigating a case involving staff from her local branch and beyond. Accounts had been emptied and they believed Alice’s could be next – they were watching it as part of a sting. Any moves on it would be the final evidence before arrests could be made.
This was terrifying. Alice had several hundred thousand pounds sitting in savings accounts because she and her husband had recently sold a property which still had a mortgage on it. Paying it off now incurred an early repayment charge, so they were waiting for the tie-in period to end in a few months’ time. However, the agent reassured her that everything was under control–her money had been ‘insured’, she was in safe hands. He asked that she keep this confidential – it was a local investigation and if somebody involved heard about it, the case could collapse. For this reason, Alice only told her husband, a retired kitchen maker, who thought it sounded genuine.
For over a week, two fraud agents rang three times a day. One had a broad Scottish accent, the other sounded like he was from Essex. She knew their names – Brian and Chris – and their mobile numbers because, like everyone else, they were working from home. ‘They were polite and charming. It was actually quite nice to be talking to someone else as we were so isolated,’ says Alice.
Then Brian and Chris introduced panic. ‘One day, they called to say that an application had been made in my name for an international transfer to Dubai,’ says Alice. ‘They emailed a copy of a transfer document that looked genuine and said that if my money went abroad, their insurance wouldn’t work – I’d lose it all. They wanted me to move the money to a safe place immediately. The quickest way to do this was via a Luno account – a cryptocurrency platform – where it would sit in a wallet until we moved it back into a protected account they were opening for me at Lloyds. I was terrified, there was such a sense of urgency. Your brain is not computing logically.’
Despite now seeing this psychological manipulation, Alice still struggles to understand her subsequent behaviour. First, she went to her local branch to remove all her money. Brian and Chris had prepped her on what to say (that she was doing this for investment purposes) and warned that Lloyds staff might be obstructive – because these people might be in on the fraud.
On learning of the sums involved, Lloyds staff made Alice read leaflets about fraud then sent her to a branch to watch a video about it before talking to a Lloyds fraud agent on the phone. Lloyds also asked her to sign a waiver accepting responsibility for any consequences of this transfer. By the next day, Alice’s money had still not been transferred so, on the advice of Brian and Chris, she moved it herself online, in sums of £25,000, five times a day for almost a week.
In total, she moved £525,000 to Luno. The entire sum disappeared untraceably. If this sounds incredible, or a one-off, it certainly isn’t. In the past year, the amount lost in the UK through authorised push payment scams (when fraudsters deceive people like Alice into making bank transfers) was £1.3 million – per day. In the year from April 2020 to 2021, the heart of the pandemic, frauds rose by 33 per cent, with a loss of £2.3 billion reported to the national fraud intelligence centre Action Fraud – although it’s estimated that only one in seven scams are reported, so this is the tip of the iceberg.
Adam French, consumer rights expert at Which?, calls it ‘the pandemic within the pandemic. We’re more isolated and vulnerable and we’re living online,’ he says. ‘At the same time, fraudsters have become more convincing and sophisticated and taken full advantage of the uncertainty.’
Some scams are directly Covid-related. ‘There were texts informing recipients that they’d been caught breaking Covid rules, and to click on the link to pay the fine,’ says French. ‘Other texts and emails claimed recipients were entitled to HMRC goodwill payments, council tax rebates or free school meals if they entered their bank details.’
Many scams have capitalised on our changed behaviour. ‘Everyone is shopping online and fake sites advertised on social media such as Instagram and Facebook have become extremely convincing,’ says French. Although larger sums tend to be lost to older people in investment frauds and push payments, there is no such thing as a typical victim. ‘Victims of online shopping fraud tend to be young – with 56 per cent aged between 20 and 39,’ says French. ‘Research shows that those comfortable with the internet are more likely to be scammed as they drop their guard more easily.’
Delivery scams have also been lucrative for fraudsters, with three out of five people receiving a fraudulent text or email telling them there is a charge to be paid on their scheduled delivery. ‘Often it’s a small sum,’ says French, ‘but the phishing website behind it is very convincing and the details you fill in act as a gateway to a bigger fraud.’
This was true for Eleni Harlan, 35, and her mother, also called Eleni, from Southeast London. In May this year, Eleni’s mother responded to a text asking for £1.50 to receive a Hermes parcel. Immediately afterwards, her mother realised she’d given too much information – her card details, account number and sort code. She rang Lloyds who froze her card and reassured her that fraudsters could do nothing more.
Eleni’s mother, a 70-year-old widow, was nervous. Greek is her first language and she had only moved to the UK in February 2020, following the death of first her husband and then her eldest son, Eleni’s brother, from brain cancer. She packed up her entire life to be with her daughter – weeks later, the pandemic hit. In her first year here, she had barely left her daughter’s neighbourhood nor made any friends of her own.
A few days after receiving the fake text, mother and daughter went to Central London and both had their hair done. When they returned to Eleni’s flat, busy with tea-time for Eleni’s two young children, aged four and seven months, her mother’s mobile rang.
‘The caller told Mum that he was a Lloyds fraud agent and she’d been the victim of a phishing scam. They needed to act quickly to protect her account,’ says Eleni. ‘We had the phone on speaker – it was an English accent, very much like any 30-something man from the banking world.
‘I asked how he could prove he was from Lloyds. He said that he’d sent a message from the Lloyds texting service and also to check the caller ID matched the number on the back of my mum’s debit card. We verified those two things. I heard him say, “We need to generate another account number and sort code.” I thought, “This is fine.” I was busy with two unruly children.
‘Mum was concentrating on following his instructions, on being a good customer and doing exactly what she was told – and the caller knew every stage,’ says Eleni. It was only when Eleni’s partner came home and overheard the conversation he sounded the alarm. Eleni called Lloyds from her own phone while her mother put the fraudster on mute. When Eleni was finally connected to Lloyds, she was told, ‘Yes, this is a scam.’
‘It was such a shock,’ says Eleni. ‘For a while, my mum couldn’t speak, then she said, “I’ve lost all my money.” In ten minutes, she had transferred £8,000 to the fraudster – the entire contents of her UK account.’
Richard Emery is an independent fraud expert who has been busier than ever this year. Emery divides his time between campaigning for banks and regulators to protect against fraud more effectively and helping genuine victims to be reimbursed.
‘People cry down the phone and I try to explain that this isn’t their fault,’ he says. ‘The emotional trauma is enormous. The sense that they have let down their family. It might be that the money was meant to provide long-term care for a vulnerable relative, or house for a disabled child, or a pension for a married couple. They blame themselves.’
At present, a banking voluntary code of practice called the CRM (Contingent Reimbursement Model) states that a fraud victim who has taken reasonable care and not been grossly negligent will be reimbursed by their bank. However, this is open to ‘interpretation’ – at the time of writing, Alice’s money had not been refunded and Lloyds had only refunded a small portion of the money Eleni lost.
A Lloyds bank spokesperson said: ‘We have a great deal of sympathy for Mrs Allen and Mrs Harlan who sadly fell victim to scams after being convinced by cold callers to transfer money to so-called “safe” accounts. We did everything we could to protect Mrs Allen including stopping payments, writing to her to explain our concerns, and involving the police on two occasions at a branch and at her home through the banking protocol initiative. Mrs Harlan entered her details in a fake Hermes phishing link which fraudsters later used to convince her they were calling from the bank and asked her to transfer money to a personal account with a different name. It’s important for people to remember that a genuine organisation will never ask you to share your secure banking details or transfer money from your account. If anyone does, it’s a scam – no matter how genuine it appears.’
However, Emery firmly believes ‘banks aren’t doing anything like enough’ and he campaigns for two simple changes that would make a huge difference. The first is to introduce ‘second party notification’ – this means that every time someone creates a high value push payment, a nominated second party will be informed. ‘Anyone can be vulnerable if a fraudster gets them when they are pressured, ill or distracted. If everyone were to nominate someone like a partner, a parent, a carer, a daughter to also receive a notification, it would allow that person to ask you why you have authorised the payment.’ The second change is a 24-hour payment delay for payments above a specified amount. The campaigning arm of Which? agrees that banks can be far too quick to transfer a customer’s life savings. Which? is also pushing for social media platforms to have a ‘duty of care’ to prevent scammers such as fake retail sites from advertising on their platforms – the forthcoming Online Safety Bill would be an opportunity to put this in law.
‘The pandemic has made Apple, Microsoft and Google richer than ever as we’ve had to do everything online,’ says French. ‘They reported combined profits of more than £41 billion during the last quarter but they are not using those profits to put the protection in place to stop users from becoming targets.’
Earlier this year, the Mail On Sunday launched a campaign calling for more resources to tackle financial fraudsters. ‘The pandemic has enabled these criminals to breed like never before,’ says the paper’s personal finance editor Jeff Prestridge. ‘They have become a plague of financial fraud rats, using the cloak of lockdown, home-working and our increasing use of the internet to empty our bank accounts. We need to hunt down these criminals and lock them up. To do this we need a dedicated and properly resourced police unit focused purely on fighting financial crime.’
Any future protections could be too late for victims like Eleni and Alice, who have been left shell-shocked by their ordeals. Eleni is fighting for her mother to be reimbursed and feels strongly that when her mother reported the initial phishing text to Lloyds, it should have warned her what could follow.
‘She had just moved to a new country and this has shown her that she’s very vulnerable,’ says Eleni. ‘She doesn’t want to leave the house and when she’s home, she’s afraid to answer the door. Someone stole £8,000 from her but she thinks it’s all her fault.’
In Alice’s case, she has sold an inherited property in order to raise the money needed to pay off the mortgage she owed – the sum she had ringfenced but lost to the scammers. ‘My plan had been to use that inherited property to help my three sons buy their own homes; as a mother, that makes me feel terrible,’ she says. ‘We are very lucky that we’re not destitute – but we thought we were going to be comfortably off in retirement. Instead, we’re watching the pennies.’
The psychological impact has been far worse. ‘At first, I was a gibbering wreck,’ she says. ‘I was shaking, I was ill, I had to take sleeping pills and it was on my mind the whole time. Why did I do it? What was I thinking?
‘I’m still terrified of unexpected phone calls or emails and texts. It’s made me paranoid which complicates everyday life – so much is done online whether you like it or not. Every single day I think about it. It’ll be with me for ever.’
HOW TO PROTECT YOURSELF FROM FRAUD
Adam French, consumer rights expert at Which?, believes scammers are now so sophisticated, it isn’t possible for the public to stay one step ahead at all times. However, there are things you can do…
- Question any contact that comes out of the blue: phone calls, knocks on the door, texts and emails. Find the company website and call the number to verify before sharing personal details.
- When shopping online, it’s hard to tell if a site is fraudulent. Try doing a ‘reverse image search’ on the item you’re buying – if it appears on multiple similar websites, it could be a scam. Always research the site or the brand – if there’s no social media footprint, no reviews, or multiple reviews warning you away from it, be wary. Read the ‘about us’ section and check the contact details for a listed address. Poor English on sections of the site is another red flag.
- Sign up for Which? scam alerts, which outline the latest deceptions and provide practical advice on reducing your risk. For details, visit campaigns. which.co.uk/scam-alert-service