In its recent Budget, the government announced it would increase national investment in the hope of improving infrastructure and stimulating the economy. So, many unsuspecting members of the public failed to see anything suspicious about a video of prime minister Keir Starmer promoting a “national investment platform”.
Yet, the video didn’t really show the prime minister at all. According to McAfee, it was a deepfake – an incredibly convincing video of a real person, generated by Artificial Intelligence (AI). Further deepfakes of Prince William also promoted the investment platform, which turned out to be fraudulent.
Unfortunately, financial scams like these are becoming more common. Indeed, MoneyAge reports that more than 1 in 8 UK adults have fallen victim to a scam in the past year.
On 7 October 2024, the government introduced legislation to make it easier for victims of fraud to recoup their wealth. However, these new rules don’t give you complete protection and it’s still crucial that you’re aware of the dangers of fraud.
Read on to learn more.
New rules could give some protection but only cover authorised push payment fraud
Authorised push payment scams work by convincing you to willingly send funds from your bank to a criminal. There are several ways that scammers might do this.
For instance, they could pose as your bank, warning that your account is compromised and you need to move your funds to a safer account. Alternatively, they might act as a friend or family member in trouble, or even impersonate the police. You may be convinced to send money to a fraudulent investment scheme too.
AI technology is making push payment fraud more convincing as scammers create deepfakes and can even convincingly mimic voices.
Fortunately, the new legislation that came into effect on 7 October 2024 states that all firms that provide payment services must reimburse victims of push payment fraud, up to a total claim limit of £85,000. This applies to all payments made using Faster Payments (an electronic payment system) or CHAPS (a same-day bank transfer often used for larger payments).
This new legislation is positive for consumers, but the rules don’t cover all instances of fraud. For example, Nationwide confirms they won’t necessarily offer refunds if:
- The payment is international
- You make the payment using cash, a cheque, credit card, debit card, or prepaid card
- You acted with gross negligence – this normally applies if you ignored a warning that the payment request could be fraudulent
- The payment was made before 7 October 2024, or more than 13 months before you made the claim.
As such, if the payment doesn’t meet certain criteria, you may not be able to recover your wealth after falling victim to a scam.
Additionally, certain investments could be very volatile, while not technically fraudulent. Consequently, if you invest in risky products advertised online, you could experience significant losses and won’t be reimbursed.
Also, firms are only obliged to refund up to £85,000. While they can choose to cover more than this, they may not, so if you lose a significant portion of your wealth, you might not recover it all.
All this means that, while the new rules give you some protection, falling victim to a scam could still disrupt your financial plan.
There are also some emotional effects of fraud that you might want to consider.
60% of fraud victims said the experience had a negative effect on their mental health
We typically focus on the financial effects of fraud. But, becoming the victim of a scam could also affect your emotional wellbeing, even if you recover the funds afterward.
Consumer organisation Which? surveyed 1,000 UK adults who had been affected by fraud – 55% of the respondents were able to get all their money back.
Despite this, 60% of those surveyed said that the experience had a negative effect on their mental health and 71% said it contributed to stress.
Additionally, victims said that they had difficulty trusting people afterward, and some felt “stupid and ashamed”. Respondents also reported lasting feelings of depression, excessive tiredness, and trouble sleeping.
As such, even if the financial effects of fraud are not lasting, you could feel the psychological effects for a long time.
We can help you avoid becoming the victim of a scam
If you’re concerned about falling victim to scams, you may benefit from working with a financial planner.
We can support you in choosing investment products that align with your goals and attitude to risk. This means you don’t need to rely on social media adverts or unsolicited phone calls to find opportunities to grow your wealth. We’ll also perform due diligence to ensure that any investments are legitimate.
Further to this, we can advise you before you make any financial decisions. This support could be very valuable in situations when scammers apply time pressure to encourage you to make rushed decisions. Our guidance may prevent you from making any choices that work against your financial plan.
Get in touch
We are here to help you protect your wealth.
Please give us a call on 01276 855717 or email info@braywealth.com today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Approved by the Openwork Partnership on 25/11/2024
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