How to protect yourself from scams and fraud when transferring money abroad
Knowing how to recognise scams and remaining vigilant is the best way to protect your money. Having worked with hundreds of thousands of individuals over the last 20 years we know how to recognise when people or businesses are potentially the victims of a scam.
Transferring money internationally often means using information provided by third parties that you have not been able, or it is not feasible, to meet face to face. As such, this creates increased opportunity for scammers. Our team has broken down the main types of scam and created the below summary along with what you can do to keep your money safe.
International payment scams
Foreign exchange scams are when criminals trick people and businesses out of their money by promising them extremely competitive exchange rates. The classic phrase of when it seems too good to be true, it probably is, is particularly relevant when it comes to international payments.
The first thing to consider is whether or not the rate you are being quoted is possible. While people can technically give you any exchange rate they wish, it is worth checking the inter-bank rate (the exchange rate the large banks get as they are transferring hundreds of millions). If the rate you are being quoted is better than the inter-bank rate then your provider is making a loss… This doesn’t guarantee that the business is not legitimate but it means it is worth asking the question, how they are able to give you a better rate than the banks are getting.
The next thing to consider is whether the business is a legitimate entity or not. With lots of small foreign exchange providers popping up, it can be difficult to know if a company is fraudulent or not. One red flag however is the amount of information you are asked for before making an international transfer. If an FX provider is FCA regulated they will need to ask you for certain information before they are able to complete the transfer such as:
- Proof of identification
- What is the purpose of the transfer
- Where have the funds come from
If these stages are being skipped then you should ask yourself why. The good news is that you can always see if a business is FCA regulated on the FCA website to help put your mind at ease.
This type of scam occurs when a perpetrator advertises a false investment opportunity, whether that be via a more traditional advert or by contacting you directly. The perpetrator will offer quick and large returns if you hand over your cash.
Always be sure to check if an investment opportunity is legitimate before handing over your money. Be extra vigilant, as scammers can copy genuine investment company’s details. You can also make use of the FCA’s ScamSmart database, which provides steps to make sure the company is legitimate and not on their warning list. It’s also always worth consulting a financial advisor before making any large financial decisions. People trying to commit these scams often highlight investment opportunities in foreign countries and in different currencies hoping to prey on any potential lack of knowledge in these key areas.
Purchase and advance fee scams
Making purchases via online platforms such as auction sites or social media is commonplace in our plugged-in times. However, scammers have taken advantage of this, asking buyers to make direct transfers rather than go through official channels to receive an item quicker or to bypass fees, pocketing the cash and not fulfilling the purchase.
To protect yourself, it’s always best to see an item in person before buying. If you can’t do this, see if you can pay a deposit in advance rather than the full price. On the site itself, you can check the sellers’ reviews for negative feedback and ensure you use a credit/debit card or the website’s recommended payment service for more protection than you’d receive with a bank transfer. If you’re buying a car, check if the vehicle matches records held by the DVLA.
This can be more difficult if buying high value and unique items from abroad. It may be the case that for items such as art, wine, cars, etc it can be harder to trace who is making the sale and whether they are from a trustworthy seller.
This scam can be done with services as well, with scammers asking for an up-front payment before completing any work. To mitigate this, always research tradespeople, ensuring they’re registered to the appropriate organisations, and don’t send money for services you have not asked for.
Trusted company scams
These scams work by posing as a company you already work with, in some manner. They will intercept communications from a company, lawyer, or other trusted institution, asking for payment. However, the payment details will be that of the scammer.
If you suspect an invoice or communication you’ve received is not genuine, get in touch with the company directly using a trusted number and verbally confirm the details are correct. If you haven’t paid them before, send a smaller initial payment to ensure it’s been received by the intended party.
At Currency UK we will always seek to do the same with you, either by verifying your online instructions with additional security measures or a phone call from our support staff (or both).
A less sophisticated version of the trusted company scam discussed earlier, the scammer will impersonate more general institutions like banks or HMRC; or use publicly available information to pretend to be your social media contacts. They may then ask for bank transfers, send links containing malware or ask for personal information.
Organisations like those described above will never ask you to transfer money to a ‘safe account’, so this is always a red flag when identifying scams of this nature. Furthermore, you should never follow suspicious links or share your bank details with people who call you out of the blue. Scammers may also attempt to mimic the phone number of companies and your personal contacts, you should use a different phone to call the genuine parties to verify information before acting.
Relationships developing online are increasingly common, but the layer of anonymity afforded by certain online spaces is fertile ground for scammers by posing as a potential romantic partner, developing a relationship and then asking for money. Even if you think the person you’re speaking to is genuine, you should never send money to someone you haven’t met in real life.
In order to protect yourself, you need to keep your eyes open to where the possibilities for scams to occur may lie, as per the list above.
There are also other ways to reduce the risk of scams or fraud such as:
- Use unique passwords
- Turn on 2FA
- Use passcodes instead of PIN’s
- Different emails for different uses (banking, social media, day to day, etc).
- Protect yourself when using a public network such as through the use of a VPN (virtual private network)
While scams can be easy to spot when they are low effort, this can cause people to be lax when they are confronted with a more sophisticated, targeted operation.
Everyone is at risk when they are not vigilant. When it comes to money, suspect everything, even things that seem professional and legitimate.
At Currency UK we work with our clients to make sure they know who they are transferring money to and for what purpose.
Stop. Challenge. Protect.
Take Five to protect yourself
We’re backing Take Five, a national fraud awareness campaign led by UK Finance. Following their advice is a great way to help keep your money safe.
Stop – Take a moment to stop and think before parting with your money or information.
Challenge – could it be fake? It’s OK to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.
Protect – If you believe you’ve fallen for a scam, contact your bank immediately on a number you know to be correct.