Online scams

by Mark Rowe

Should we get paranoid about online scamming, asks Jim Gannon.

In 1997 when only about 7pc of the UK population was actually online it was never really considered it was ever going to be an issue but here we are two decades later and the instances of reported fraud and cyber crime approaches figures of around six million cases a year. Looking at the data available from the Office for National Statistics (ONS) more than six per cent of the population become victims of fraud each year. The crazy bit about this is that many of the online scams operated are well known, but the public keep falling for them. The old saying that if it sounds too good to be true, it usually is, seems to be continually ignored in favour of a chance to get rich quick. One would think that a chance of losing all your investment by one click of a button would deter people who have spent their entire working life planning for their retirement and the future of their families; but apparently it does not, according to the facts. Nearly a quarter of those scammed lose everything and in some cases this is big numbers and in some cases even their home.

So why does it keep happening

According to Stephen Lea Emeritus Professor of Psychology at Exeter University, it is not because we are old, stupid or ignorant of the ways of computers because unlike most crime fraud is more likely to affect you if you are a well educated professional; and the group most likely to be affected is students, who are presumed to be the most computer-savvy of us all. He adds that the answer lies in the most basic fact about human economic behaviour, in that we are not the kind of perfect calculating machines that 20th century economists imagined. He says that the modern economy is highly complex and every day we are faced with choices between far more options than we could ever consider, let alone decide between intelligently. So basically we navigate through economic life using simple rules and habits which enable us to make good enough decisions, most of the time. Unfortunately when we are following rules, someone who deliberately breaks those rules can take advantage of us.

Reading is believing?

So when you receive an email carrying your bank’s logo, or one from your investment management company informing you to transfer funds to a new named account because something unusual has happened with your existing account; your initial reaction is to believe it is all bona fide and unless your brain’s logic clicks in pretty quickly you could be about to lose a fortune. Scammers of course activate email addresses behind the genuine details waiting like a spider for something to drop into its web. Of course current online fraud practices come in many guises and one of the most widely practiced emanates from off-shore unlicensed shell companies operating with untraceable nominee directors using PO box numbers at drop box addresses and using UK based scam management companies. These fraudsters often take expensive advertising in the national press offering get rich quick schemes and hiding behind slick websites, all designed to seduce would-be investors by offering guaranteed returns which amount to absolutely nothing except misery and stress. Deals are often signed up in idyllic foreign locations by people never seen or heard of ever again.

What can be done

Turning again to the advice offered by the eminent Stephen Lea; he says quite clearly that it is no good telling ourselves to be more rational or to be more like the imaginary economic man who takes every possibility into account before every decision. Nobody can do that, he says. What we can do however is to develop good habits so that criminals cannot exploit our ordinary habits. We have to remember that criminals do this for a living and in all probability work longer hours than the normal working man because the pay is so good and the future looks more promising. Prof Lea suggests a few good habits that we should adopt, such as: never click on a web link in an email, as a false email address may be hidden underneath it. Never open an attachment that comes in an email you were not expecting, or from someone you do not know, as it might plant a virus in your computer. Do not ever assume that an email comes from the person listed in the ‘from’ field as it can be easily faked, if you are sending money to someone whose bank details you have not used before. He reminds us that these are simply technical rules based on known scams which would have in most cases saved people from losses.

It’s a scammer’s world

We should never lose sight of the fact that it is a scammer’s world and that new scams are being conducted every day online. Lea points to one simple golden rule and that is never take important financial decisions on your own. Over-confidence in your own judgement is one of the biggest risk factors for becoming a fraud victim. If you have inadequate online protection you are more likely to become a victim of online crime. Never give out your online password or your banking pass code or pin number to anyone online or on the telephone even if they claim to be your bank or the police. Don’t become a victim.

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