Credit crises drives scammers to change .jpg

Credit crises drives scammers to change


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Bill Blevins is Managing Director of Blevins Franks. He has specialised in expatriate investment and tax planning for over 35 years. He has written books and gives lectures on this subject in Southern Europe and the UK.

THE CREDIT crisis has forced scammers to change the way they cheat investors out of significant sums of money.

As credit is harder to obtain in the current credit crunch, instead of taking on someone’s identity to obtain money, fraudsters are tapping into accounts that are already set up.

Known as ‘facility takeover theft’, the swindlers take over and control accounts, such as bank and credit card accounts already in existence. It is often executed over the internet through various ploys to dupe the victim into revealing account numbers, sort codes, passwords and PINS.

Facility takeover theft soared 157 per cent during the first half of 2008, according to figures from CIFAS, the UK’s fraud prevention service.

Head of Communications at CIFAS, Kate Beddington-Brown, noted:  “This is a clear and worrying trend. Although it is difficult to pin down the precise reasons for such a rise, frauds of this kind are perpetrated through channels such as email and the telephone, scams such as “phishing” (the use of spoof emails and websites in order to deceive recipients into divulging personal financial data), or by the interception of credit cards and statements in order to take over an account, divert or fraudulently order goods.

“What the figures underline, therefore, is that the public’s vulnerability to fraud remains, even though its form may be changing. This is reinforced by the recent APACS release, which demonstrated a similar rise in phishing incidents during the first half of 2008.

We must all be vigilant in the way we respond to requests for information, the attention we pay to our statements, and the expected arrival dates of new credit and debit cards, for example.”

The figures released by APACS, the UK payments association, show that there were more than 20,000 reported phishing incidents in the first half of 2008, an increase of more than 180 per cent from the same period last year.

CIFAS Chief Executive, Peter Hurst, commented: “It is clear that the current credit crunch is leading to changing fraud trends. While it is good to note that the number of victims of identity fraud has decreased, this is more than outweighed by the migration to different types of fraud”.

“These figures prove that complacency in the fight against fraud is not an option.

Economic climate

The reasons for changing trends can be numerous, but one clear influence is the fact that credit has become harder to obtain. As a result, not only are fraudsters turning their attentions to accounts that are already in existence, but consumers and anti-fraud departments are also feeling the effects. More lies are being told to gain credit, and this creates even greater workloads on the desks of those on the front-line.”

The racketeers are also using the difficult economic climate as a persuasive tool with the ruse known as a “boiler room scam”. Innocent victims are conned of their cash with pressurised telephone calls offering the “investment opportunity of a lifetime”. They are usually asked for an immediate upfront payment, often of several thousands of pounds.

These scams cost each victim an average of 20,000 pounds Sterling and in some instances five times as much. Operated from back rooms which could be anywhere in the world, a fleet of tricksters will use a bank of phones to contact potential investors and con them into paying money upfront as soon as possible. Once a target sum of cash has been collected by the cheats they abandon the premises, usually leaving no trace.

Scammers often pick their targets by collecting information from company registrars. Every UK listed company has to be represented on a share register, a publicly accessible document, which can provide invaluable contact details of investors as well as the type of industry in which they are interested. The racketeers can then contact victims armed with knowledge that will make their scam sound plausible.

In the UK, the Financial Services Authority (FSA) proposes to fight the fraudsters by stipulating that buyers of shareholder lists should give the reason for the purchase. As tricksters are accustomed to lying, this may not work. So another proposal is that listings should only contain details of institutional shareholdings and not those of private investors.

The FSA also provides a service where you can check on the validity of a company to ascertain if it is authorised to operate in the UK. It is available on their website at or by telephoning the FSA Consumer Helpline on (0044) 0845 606 1234.


“Application fraud” is also on the increase. Fraudsters use false information on application forms such as for loans or credit cards, in some cases by not declaring a previous address where the applicant’s name is possibly blacklisted due to a poor credit history.

“Previous address fraud” is where the fraudster steals another person’s identity and falsely claims that the victim has recently changed address. Due to the short time at the alleged new address, any credit reference agency checks are performed primarily against the previous address where the victim is still resident.

APACS has published a Banking Safely Online advice guide to help you to stay vigilant and safe when banking online. The guide is freely available to download from

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