Families battling cost of living crisis become new targets for fraudsters

·2-min read
Fraudster cartoon
Fraudster cartoon

Fraudsters have switched from targeting taxpayers to families struggling with the cost of living crisis.

Reports of scammers posing as HM Revenue & Customs have dropped by 97pc in the past 12 months, the tax authority said, amid warnings con artists had pivoted to target fresh victims.

The number of “phishing attacks”, where scammers posed as HMRC staff in order to obtain sensitive information from taxpayers, fell to fewer than 2,500 in December, down from almost 80,000 in March of last year. HMRC fraud attacks peaked during the pandemic as thousands of taxpayers and businesses were navigating emergency coronavirus support such as furlough payments, bounce back loans, self-employed help and the Eat Out to Help Out scheme.

Since then reports of HMRC scam texts and phishing emails have dropped by 97pc and 92pc respectively, new figures showed.

Over the same period, instances of “loan fee fraud”, where criminals demand upfront fees from people seeking financial help before cutting off communication, have increased rapidly.

Gangs have moved from exploiting taxpayers looking for support during the first outbreak of the pandemic, to focusing on families looking to borrow money in order to afford rising gas bills, higher taxes and rampant inflation, financial institutions warned.

Amber Burridge of the fraud prevention network Cifas said criminals were “adapting their methods" in response to concerns over the rising cost of living.

“Throughout the pandemic, we saw gangs impersonate HMRC as individuals and businesses sought financial assistance from the Government. However we now see them focusing on ways to exploit the rising cost of living,” she said.

“Fraudsters are preying on those with financial worries by impersonating banks, loan providers and credit card companies, in the hope they will click on links, disclose personal details or pay a charge for a bogus service.”

More than 30,000 people have lost close to £41m to “advanced fee fraud”, where scammers demand arrangement fees for fake loans they never provide, since the start of 2021, according to Action Fraud, the scams unit of the City of London Police.

It said it was now receiving 2,800 reports of the scam every month, up from 1,900 in August – an increase of almost 50pc.

The City watchdog, the Financial Conduct Authority, said cases were a third higher in the run-up to Christmas compared with last year, as fraudsters cashed in on parents borrowing to fund the festive season.

Paul Davis of TSB bank said fraudsters were “stepping up their game” and “putting their effort into scams to capitalise on the cost of living crisis” by “targeting struggling families”. He urged those in need of financial help to stick with reputable lenders and avoid offers that appeared too good to be true.