Increasingly sophisticated technology and the introduction of pension freedoms are leading to a rise in the number of financial scams.

Fraudsters target people of all backgrounds, ages and income levels, which means anyone reading this article could be a potential victim.

We spoke to the experts to find out what you should look out for and how you can  protect yourself.

BEWARE PENSION SCAMS

The Government estimates that £43m has been unlawfully obtained by scammers since April 2014, with those targeted having lost an average of £15,000.

There was a pronounced increase in scams after the pension freedoms were introduced almost three
years ago.

One of the most common scams is where fraudsters try to coerce people to withdraw their money from their pension pot and invest it elsewhere. A particular target is people with defined benefit (DB) pension schemes.

‘Often these investments will promise astronomical, guaranteed returns that fail to materialise, or in the worst case scenario the investment simply won’t exist at all,’ warns Tom Selby, senior analyst at AJ Bell.

One technique is known as ‘pension grooming’, when fraudsters groom individuals on how to respond to pension providers when concerns about suspicious transfers are raised.

‘Customers are reassured by the fraudster and told to disregard everything pension providers say. They are told that providers don’t want to protect their savings, but want to keep hold of their money,’ explains Kate Smith, head of pensions at Aegon.

Other scams offer people the ‘opportunity’ to access some or all of their retirement pot before age 55, usually through a loan. The offers often fail to mention the 55% tax charge associated with accessing your pension early or the huge fees the companies charge.

TOO GOOD TO BE TRUE

Some scammers try to entice people to put their money into exotic investments that are simply too good to be true. The investment ‘opportunity’ could be a hotel development in Cape Verde, a vineyard, jewels or a plot of land.

Sometimes the fraudsters are pretty convincing at impersonating a genuine investment company. They may even show you glossy brochures, certificates and professional looking websites.

The ‘broker’ will usually contact you out of the blue with what looks like an incredible opportunity, and try to pressure you into making a quick decision.

BANKING SCAMS

Criminals might contact you pretending to be your bank. They do so in order to obtain passwords and PINs and, in some cases, dupe you into transferring your money to them.

Genuine banks never phone you to ask for your PIN or online banking password, nor do they ask you to update your personal details by following a link in a text message.

TAX SCAMS

Scammers often try to catch people out by sending fake tax rebate messages.

The emails and text messages look like they’re from HM Revenue and Customs and ask you to click on a link. The link could contain malicious software or direct you to a bogus website.

HMRC says it never sends notifications of a tax rebate or refund by email, nor does it ask people to disclose personal or payment information by email or text.

BITCOIN SCAMS

New bitcoin scams are popping up every day, primarily because the cryptocurrency market isn’t regulated by governments.

Scammers try to trick people into visiting malicious websites, entering their private details or clicking links that contain harmful software.

Some exchanges and initial coin offerings (the way companies raise capital) have been discovered to be completely fake.

HOW TO PROTECT YOURSELF

There are a few simple things you can do to avoid getting duped:

1. Be suspicious of cold-calls or unsolicited texts or emails.

2. If you get cold-called by someone claiming to offer an incredible investment opportunity hang up the phone immediately. Don’t respond to text messages or emails from someone you don’t know.

3. Don’t deal with unregulated advisers.

4. Check the Financial Conduct Authority website to ensure the company is legitimate and regulated.

5. Be wary of overseas investments.

6. Make sure you’re 100% confident you’re being sold a genuine investment and that you fully understand the risks.

7. Watch out for schemes offering ‘guaranteed’ returns.

8. ‘Nothing, and I mean nothing, is guaranteed when it comes to investments,’ says AJ Bell’s Tom Selby. ‘The closest thing you’ll get are government bonds and final salary pensions – ironically the very things scammers often encourage people to leave. So if a company you’ve never heard of says it can deliver guaranteed returns of any amount, don’t touch them with a barge pole.’

9. Don’t rush to make a decision.

10. Make sure a pushy salesman doesn’t coerce you into doing something you might later regret. Read any documents carefully before you sign on the dotted line.

11. Report possible scams.

12. Contact Action Fraud by calling 0300 123 2040 or online at actionfraud.police.uk

Who are the victims?

Anyone can be a victim of fraud, but one of the groups most likely to lose money is men aged 36 to 55.

Action Fraud says this group takes risks when investing, acts on impulse and has the ability to invest large amounts of money.

This increases the likelihood of them becoming a victim and, when they do, they feel a sense of shame that results in them not reporting the fraud. (EP)

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