Young Brits are most likely to get scammed, with many victims losing huge sums of money to online shopping scams, pyramid schemes and rental fraud, a new report found.
New research from Which? shows that there were a total of 448,838 fraud reports lodged with Action Fraud between November 2020 and December 2021 as more than £1.9bn ($2.5bn) was lost to fraud.
The consumer group found that those aged between 20 and 39 were more prone to report being scammed, and accounted for two in five (39%) of all reports.
Which? identified 12 emerging fraud threats including online shopping scams, cryptocurrency scams, pyramid schemes and rental fraud.
Three quarters (74%) of rental fraud cases were reported by young people. Rental fraud is where victims are tricked into paying upfront fees to secure homes by fake landlords and letting agents.
Cryptocurrency scams rose 34% in the period. Action Fraud said it received 9,458 reports referring to crypto last year, with total losses of £204.5m — an average of £21,620 per report.
Read more: Inheritance tax receipts hit £5.5bn
The Financial Conduct Authority (FCA) does not regulate cryptocurrencies.
Those aged between 20 and 39 were also more likely to report pyramid or Ponzi schemes, with 57% of reports filed by young people. Over half (55%) of online shopping scams victimised this age group.
"Fraudsters don’t discriminate when it comes to scams and everyone is susceptible to these growing numbers of crimes, with many young victims being tricked into losing life-changing sums of money," said Jenny Ross, Which? money editor.
Meanwhile, people aged 60 to 79 accounted for 20% of all fraud reports. This age group makes up the highest proportion of reports for computer fixing fraud (47%), recovery fraud (38%), and ‘419’ advance fee fraud (37%) which involves a payment up front in promise of wealth.
There was a rise in online shopping scams and auction fraud as they were the most reported type of fraud overall. This is where victims pay for goods on an online marketplace that do not arrive, or do not receive payments for goods they have sold. These scams made up 23% of reports.
According to Which?, investment fraud was responsible for the biggest losses, with the average victim losing almost £50,400 to pyramid or Ponzi schemes, while reports rose 59% on last year according to the ONS.
Pyramid scheme scams involve recruiting friends or family while Ponzi schemes lure investors and pay profits to earlier investors with funds from more recent investors.
Victims also lost an average £25,000 to share sales or boiler room scams, with reports up 57%.
A recent ONS report also revealed that an estimated 5.1 million fraud offences were committed in England and Wales in the year to September 2021, up 36% in two years, with fraud now accounting for 40% of all crimes recorded.
The government recently announced that it would include paid-for advertising in the online safety bill to help tackle an epidemic of scams gripping the nation. It also plans to make it a law for firms to reimburse scam victims.
The bill must now ensure that the FCA has the resources it needs to hold firms to account and take strong enforcement action where necessary.
Ross added: "The government’s decision to include paid-for scam adverts in the online safety bill, along with promises to make reimbursement mandatory for bank transfer scam victims was a huge step in the right direction, but it's now up to the government and regulators to get it right.
"We will be checking carefully that the Online Safety Bill goes far enough in protecting consumers from fake and fraudulent adverts, and it’s vital that the government swiftly introduces the right legislation for bank transfer fraud that will ensure victims get fair and consistent treatment."
12 'emerging fraud threats' identified by Which? with the year-on-year increase in reports of such scams to Action Fraud and average scam loss
1. Online shopping/auction scams (14%), £650
2. “Other” advance fee fraud — where scammers ask someone to pay money upfront for fictional goods or rewards (15%), £1,296
3. Offline shopping fraud — this could include buying goods from a newspaper advert in person or on the high street (14%), £2,692
4. Computer repair fraud (24%), £1,448
5. “Other” investment fraud — financial fraud perhaps involving foreign exchange, cryptocurrency or investment seminars (34%), £24,089
6. Dating scams (39%), £10,349
7. Boiler room scams (57%), £24,887
8. Rental fraud (11%), £1,531
9. Phone fraud — fraudsters may pose as a mobile network to offer non-existent or worthless insurance, or scams may involve missed calls or texts that charge premium rates when someone replies (48%), £252
10. Pyramid/Ponzi schemes—– investment scams may pay earlier investors with money taken from later investors, but the flow of new investors eventually runs out and so do the returns (59%), £50,429
11. Fraud recovery scams — when someone is asked to pay a fee to someone who pretends they can recover money you lost to a previous fraud (33%), £17,598
12. “419” advance fee fraud — these scams involve a bogus request from a stranger to pay an admin fee to help move money from one country to another in return for a portion of the money (61%), £2,563
What to look out for to avoid being scammed
Which? says many scams originate online via phishing emails or rogue adverts on search engines and social media, directing people to fake investment comparison websites or websites cloning regulated firms.
Sham investment companies often pretend to be backed by celebrities or social media influencers and may even create fake news articles that appear to endorse them.