How to protect yourself from financial fraud and internet scams

The internet has revolutionised the way we live, work, and connect with the world around us.

The online world has great potential for building and keeping relationships, advancing your career, and staying up to date with the news, but there are certain risks to be aware of. Unfortunately, the digital world can be fertile ground for financial fraud and online scams.

Safer Internet Day is an annual event that aims to raise awareness about these risks. This year’s theme, which the UK celebrated on 11 February 2025, was all about protecting yourself and others from internet scams.

This subject is more important than ever, as the Financial Ombudsman Service (FOS) has said that as of September 2024, it has seen unprecedented quarterly levels of fraud and scam complaints. Indeed, the FOS had more than 8,700 cases submitted in just three months.

From sophisticated emails to elaborate romance scams that prey on victims’ emotions, the tactics employed by these financial fraudsters are growing increasingly hard to spot. This can make it more challenging to protect yourself from financial fraud.

Here’s what you need to know about modern scams and how to keep yourself safe in a digital world.

Financial scams aim to exploit personal and professional vulnerabilities

Financial scams can come in many forms, but for the most part, they are designed to exploit your vulnerabilities and trick you into parting with your money or personal information. Understanding these tactics is the first step towards protecting yourself.

Here are some of the most prevalent types of fraud you should be aware of.

1. Investment scams

Promises of guaranteed returns or incredibly high-yield investments are often red flags. Be wary of unsolicited investment offers and always conduct thorough research before committing any money.

If you’re looking at a new investment opportunity but aren’t sure of its legitimacy, you may wish to speak with a Financial Planner or another relevant expert first.

2. Phishing emails

These are deceptive messages, often masquerading as legitimate communications from institutions you’d normally trust. They may appear as if they’re coming from your bank, online retailers, or other trusted organisations, and often contain links to fake websites that may attempt to steal your login information, bank details, or other sensitive data.

SMS phishing, or “smishing” operates in a similar way, but through text messages.

3. Artificial intelligence and fake information

Recently, Experian reported that fraud powered by Artificial Intelligence (AI) accounted for 34% of fraud crimes committed in 2024.

A particularly nefarious tactic is the use of voice cloning, where fraudsters will mimic someone known to you to gain access to sensitive information. Criminals may even include AI-generated images of trusted celebrities, designed to enhance the reputation of a scam website.

4. Social media scams

You may encounter scammers on social media impersonating your friends or family. They may request money, promote fake contests, or spread misinformation. There are a multitude of ways these fraudsters can operate, and they can be difficult to spot because they’re likely coming from a trusted source.

In some instances, they may hack directly into your friend or family member’s account, which adds a layer of authenticity. In other cases, they may steal personal images from an existing account and set up a new profile under the same name.

Some scammers may even impersonate a business, brand, or influencer account to make you believe you’re communicating with a real person.

With easy access to information, images, and branding online, fraudsters can make their impersonations very convincing. If possible, confirm the information through a second communication channel or in person before acting on anything suspicious.

5. Online marketplace scams

Whether you’re buying or selling, online marketplaces can be rife with scammers. They may put up fake listings at incredibly low prices, incentivising you to buy.

In these instances, criminals may ask for upfront payment before they “ship your product”. If you’re selling, they may claim to have made a payment, pushing you to deliver the items before payment clears. In both instances, you could be out of pocket.

6. Romance scams

Scams that rely on building a fake online relationship can be particularly challenging to deal with.

Romance scams can affect a range of people, and the City of London Police noted that in the year leading up to June 2024, it had received 8,792 reports of romance fraud, amounting to the theft of more than £94.7 million.

These scammers typically use emotional manipulation to gain your trust, and most often, it leads to them asking you for money. Most of these scams happen through online dating sites and social media and they may fabricate elaborate stories of hardship to justify their request, preying on your empathy and affection.

Nine red flags to learn and watch out for

While scammers are constantly adapting their methods, there are several common red flags that could help you identify potential fraud. Being aware of these warning signs could help reduce the risk of you falling victim to a scam.

Here’s what to watch out for:

1. Unsolicited contact from senders you don’t recognise
2. Requests for personal information that you wouldn’t otherwise share
3. High-pressure tactics and urgency that intimidate you into making a quick decision
4. Promises of guarantees or unusually low prices
5. Grammar and spelling errors that don’t appear to be professional
6. Requests for payment using unusual methods such as gift cards
7. Suspicious website URLs or email addresses
8. Inconsistencies with email addresses and company names
9. A lack of legitimate contact information.

If someone online is making you feel pressured, or anything feels suspicious, it’s better to err on the side of caution. Read our article about spotting an advanced financial scam to learn more.

Protecting yourself from financial fraud requires a proactive approach

By implementing a few key strategies, you can significantly strengthen your defences and potentially minimise the risk of falling victim to financial fraud.

Here are eight helpful strategies you could use.

1. Create strong passwords and use multi-factor authentication.
2. Be cautious when sharing personal information online.
3. Keep your software and devices updated.
4. Use reputable antivirus and anti-malware software to detect damaging software.
5. Be wary of clicking on links or attachments in unsolicited messages.
6. Monitor your bank accounts and credit reports for suspicious activity.
7. Using a virtual private network (VPN) could add an extra layer of security.
8. Trust your instincts and know that if something appears too good to be true, it very well may be.

If the worst comes to pass, and you suspect you have been a victim of financial fraud, report it to the relevant authorities, including your bank, the police, and Action Fraud or the Financial Conduct Authority (FCA).

While they may not be able to help you recover any money lost to fraud, they could offer advice or support. More than that, reporting the crime can help prevent others from falling victim to the same scam.

Get in touch

The more access you have to reliable financial resources, the more protected you could be from financial fraud. We can help with that.

If you’re already a client here at PenLife, talk to your existing Financial Planner to learn more.

Ready to take the step onto a new financial path? Contact us about how we can support you in your journey. Email us at enquiries@pen-life.co.uk, or call 01904 661140.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

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.