Plea to protect online users from fraudsters

Insurance giant Aviva is calling for greater consumer protection from online financial fraud by urging the Government to include financial scams promoted by paid-for adverts in the scope of the Online Safety Bill.

The call comes as Aviva’s research shows a correlation between having debt and falling victim to fraud.

The life, motor and home insurer, which employs 2,000 people at its life and general insurance business in York and 1,500 at its life and health insurance operation in Sheffield, said that one in eight people (13 per cent) have been the victim of a financial scam related to coronavirus. Of those, two-thirds (66 per cent) said their total debts increased over the last year.

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Almost half (46 per cent) of all scam victims said it negatively affected their mental health, their trust in others (45 per cent) and their confidence in the financial services system (37 per cent).

Aviva employs 2,000 people at its life and general insurance business in York

Nearly a quarter (23 per cent) of all those surveyed said their total amount of debt had increased over the past year, rising to one third (32 per cent) of 16 to 24 year olds. Two thirds (66 per cent) said saving money on household bills has increased in priority since the pandemic began.

The Financial Conduct Authority (FCA) has said the Covid-19 pandemic has left over a quarter of UK adults with low financial resilience.

Paul Pisano, UK financial crime director at Aviva, said: “While overall savings went up during the pandemic, there are still many people with debt or who have erratic income who are susceptible to fraud.

"Fraudsters understand that those with low financial resilience are more likely to be looking for ways to save money, reduce debt, or grow any cash they have, making them more susceptible to fraud.

"As the Government withdraws financial support for businesses and individuals, and some consumers feel increased financial pressure, we expect to see more fraud in the coming year.”

Aviva said that lockdown has transformed spending habits in the UK and accelerated adoption of the internet, with over half (51 per cent) of people saying they used the internet more – either significantly or a little - to search for products and services over the last year.

Action Fraud data, published by the Financial Conduct Authority (FCA) reported £78m stolen in ‘clone firm’ investment scams between January-December 2020. The fraudsters set up imitation websites which look like well known financial services brands - often using the legitimate company name within the domain name - through which to sell bogus products to unsuspecting consumers.

Fake comparison-style websites have also been set-up, which encourage consumers to provide information about themselves and the product they are interested in buying, under the guise of getting the best deal.

Mr Pisano said: “Clone-firm investment scams can be extremely convincing and pretending to be a well-known brand name is fundamental in persuading consumers to part with their cash, which could be their life savings.

"Victims tend to be people approaching retirement age who have access to their pension pot and are browsing the internet in the hope of finding higher returns in what is currently a low-interest environment.”

Aviva’s research found almost nine in ten (87 per cent) think the Government should legislate to ensure search engines and social media sites do not mislead consumers or promote financial scams.

Mr Pisano added: “The current online environment combined with challenging economic conditions and increased financial strain on consumers is creating the perfect storm for fraudsters to exploit the most vulnerable.

"The Government must act quickly to protect more consumers from becoming the victim of online fraud, by ensuring financial scams promoted by paid-for adverts are included in the Online Safety Bill.”

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