Aviva Fraud Report: Two-thirds of covid-related scams hit those with debt

Aviva is calling for greater consumer protection from online financial fraud by urging 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 Aviva Fraud Report¹ - which was published in August and investigates fraud and financial scams relating to pensions, savings, investments and insurance – found one in eight people (13%) have been the victim of a financial scam which related to coronavirus. Of those, two-thirds (66%) said their total debts increased over the last year.

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

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

The Financial Conduct Authority (FCA) said the Covid-19 pandemic has left over a quarter of UK adults with low financial resilience². 

Paul Pisano, UK Financial Crime Director at Aviva, said: “While overall savings went up during the pandemic³ 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 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.”

Lockdown has transformed spending habits in the UK and accelerated adoption of the internet, with over half (51%) 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), 27 January 2021, reported £78 million stolen in ‘clone firm’ investment scams between January-December 2020^4. 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.

Paul 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%) think government should legislate to ensure search engines and social media sites do not mislead consumers or promote financial scams⁵.

Paul Pisano said: “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. 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.”

Download the Aviva Fraud Report, August 2021.

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Sources

¹ All figures, unless stated otherwise, are from Aviva’s research, conducted by Censuswide with a sample of 2,005 nationally representative respondents, between 30 June and 05 July 2021. Categorising the pandemic time frame between 1 March 2020 and 05 July 2021, and the pre-pandemic time frame categorised as 01 January 2019 and 28 February 2020. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.

² Financial Conduct Authority (FCA) | 11 Feb 2021 | Covid-19 pandemic leaves over a quarter of UK adults with low financial resilience

³ Bank of England (BoE) | Money and Credit - August 2021 | Published 29 September 2021: Households deposited an additional £9.1 billion with banks and building societies in August. This compares to an average net flow into banks and building societies of £8.5 billion between April and July 2021, and a series peak of £27.5 billion in May 2020. The August flow is relatively strong as compared to pre-pandemic: in the year to February 2020, the average inflow was £4.7 billion. The BoE is wholly-owned by the UK government and this is public sector information licensed under the Open Government Licence 3.0.

⁴ Action Fraud data, published by the Financial Conduct Authority (FCA), 27 January 2021, reported £78 million stolen in ‘clone firm’ investment scams between January-December 2020. FCA issues warning over ‘clone firm’ investment scam.

⁵ Aviva News Release | 24 Aug 2021 | Latest Aviva Fraud Report calls for Online Safety Bill to include financial scams

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Notes:

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