Which Customers Are Most Vulnerable to Scams?
Providing a positive customer experience is a focus for most businesses, but sometimes the damage to your reputation comes from external sources. Fake websites mimicking legitimate organisations are one of the many tools used to scam customers. These put your customers in vulnerable situations and create negative associations with your brand. So, which customers are most vulnerable to scams and how can you reduce the risk?
The Scale of Scams
I recently read about a 101-year-old lady who was scammed into sending a total of £48,000 to an address in Austria. When she asked her carer to post a pre-paid letter containing cash, the carer had concerns. Speaking to her boss and Suffolk Trading Standards led to an international investigation and measures were put in place to better protect the lady from fraud.
So, are older people more vulnerable to this crime? According to the Local Government Association, 4% of over 55-year-olds have been scammed. In comparison, the figure is 20% for those in the 16 – 34 age bracket. The reality is criminals are using ever more sophisticated tools and tactics to elicit money, personal information and payment details and everyone is susceptible.
In an Ofcom survey*, 87% of respondents have seen online content that they suspected to be a scam and 46% had fallen victim. Citizens Advice estimates 40 million adults were targeted in 2022 and the UK Finance Fraud Report 2023** states that UK consumers lost £1.2 billion to scams last year. These shocking stats show the scale of the issue and it may not be the full picture.
Some people don’t report scams, as they are embarrassed about being fooled. However, speaking up is a critical step in understanding fraudulent activity and taking action to prevent it. Whether you are wealthy and financially vulnerable, part of a large corporation or a small business, digitally savvy or not, incredibly convincing tactics can catch you out.
Regulatory Action to Prevent Scams
The Financial Conduct Authority’s (FCA) Consumer Duty focuses on improving customer outcomes and protecting them from harm. To comply, firms must put in place measures to prevent customers from falling victim to scams. Every firm governed by the FCA must actively work to:
- Identify fraud
- Keep customers informed
- Prevent causes
- Improve systems
- Use data to identify unusual activity
- Share intelligence to build resilience
Companies are encouraged not simply to respond to threats, but to view them as an opportunity to learn, improve systems and implement measures to protect other customers from harm.
The FCA is working to support this mission through regulating firms, informing customers and several proactive initiatives including:
- Launching ScamSmart in 2014 to help customers be less susceptible to investment, pension, loan and insurance fraud. Over 2 million visitors and callers have contacted the consumer hub for advice.
- Web scraping; scanning the internet for fake sites and fraudulent content which results in 100,000 websites being highlighted each day. Owners of fake sites are asked to take them down or remove fraudulent content.
- Engagement with social channels to reduce advertising scams
- Assessing payment services and firms to identify issues
- Working in partnership with the Payment Services Regulator, National Economic Crime Centre, Law Enforcement, Government departments and private companies to apply regulation, advice, incentives and enforcement to encourage firms to act to reduce fraud and scams.
The UK Finance Fraud Report states that banks reimbursed funds to more scam victims in 2022. The Payment Systems Regulator is preparing new reimbursement regulations. These will incentivise more action on scam prevention.
In addition, the Government Fraud Strategy is likely to introduce a ban on cold calling from financial firms. All too often these calls present time-limited offers, high returns or low-interest terms to encourage people to sign up for services that they don’t need or want.
How Firms Can Reduce the Risk of Scams
Whether regulated or not, there are ways to prevent your customers and business from being scammed. Here are 5 recommendations:
1. Invest in enhanced security and protection; these are now business essentials, no matter what the size of your enterprise.
2. For online services, use authentication checks and strong passwords. These are friction points, but they are helping to reduce identity theft, remote purchase and online banking fraud.
3. Inform employees and customers about scams, so they are better able to identify warning signs and undertake informed actions.
4. Invite customers to call and check whether communication from your organisation is legitimate or not.
5. Make employees aware of the company policy and procedure when a scam is identified, to ensure a quick response.
Action Fraud provides information on reporting scams, along with resources for individuals and businesses. Additionally, you can sign up for text alerts about reported scams. Their news articles highlight the range of ways in which people and companies are targeted.
How Can Individuals Reduce the Risk of Being Scammed?
Although it can be difficult to spot a scam, we all need to be more vigilant and take responsibility for protecting ourselves.
1. Check if communications are from a legitimate source before responding, following links or providing any information. HMRC, courier companies, banks and the police have all been imitated, so contact them directly if you are unsure.
2. 17% of adults have had their identity stolen (Source: Nationwide), so consider what information you share and who might gain access to it. Social media channels are public and provide a great source of information for criminals, including AI voice cloning.
3. Don’t follow links in an email to make payments. Instead, go directly to an organisation’s website to make purchases or donations.
4. Understand that requests for strong passwords and two-step authentication are not a pointless inconvenience, but protections put in place to protect you from fraud.
5. If you are offered anything that seems too good to be true, double-check. That interest-free loan, bargain holiday or tickets to a sold-out event may seem like a dream come true, but they could prove to be a nightmare.
Finally, if you are scammed, report it to Action Fraud on 0300 123 2040. This is not your fault and your action could save others from the same fate.
About the author.
Helen Pettifer FRSA.
Helen Pettifer is Director of Helen Pettifer Training Ltd and a specialist in the fair treatment of vulnerable customers.
She has a background in call centre management and is committed to customer service excellence. Her training ensures front-line staff gain the awareness and resources to confidently identify and respond to signs of vulnerability.
Helen Pettifer is a British Standards Institution (BSI) associate consultant for BS 22458: 2022 Consumer Vulnerability, a Mental Health First Aider, a Suicide First Aider, a Dementia Friend, and a Friends Against Scams Champion. Recognised as a changemaker, she was invited to become a Fellow of the Royal Society of Arts in 2022.