Three-quarters of savers unable to recognise ‘too good to be true’ scams

Three-quarters (75 per cent) of savers were unable to recognise when guaranteed returns on offer were ‘too good to be true’, research from Hargreaves Lansdown has revealed.

Hargreaves Lansdown categorised these scams as anything offering 3 per cent or more in the current market.

It also found that 28 per cent of people would have to be offered guaranteed returns of 10 per cent or more to think something was a scam.

The research revealed that 85 per cent of people knew that if they got an unexpected call with the offer of a pensions review it was likely to be a scam, while 87 per cent knew that if they were told about an opportunity that that needed to ‘act fast’ to take advantage of, it was likely to be a scam.

“We’re often told to beware of things that are too good to be true,” commented Hargreaves Lansdown personal finance analyst, Sarah Coles. “The trouble is that most of us can’t tell whether an offer is reasonable and genuine, or wildly unlikely.

“The good news is that we’re getting much better at spotting common scams, like bogus pension reviews. We’re also familiar with high pressure sales tactics the scammers use.”

However, Coles warned that there were other scams savers could fall victim to, because they “take advantage of gaps” in their knowledge.

“Only one in four people recognise when guaranteed returns on offer are too good to be true, and that anything offering 3 per cent or more in the current market without any risk at all should ring alarm bells,” she continued.

“More that one in four people wouldn’t be worried until a scammer was holding out the hope of a ‘sure thing’ paying 10 per cent or more.

“We can also be foxed by complex investment structures, or by convincing scammers who tell us we don’t need to understand what we’re getting into, we just need to sign on the dotted line.

“The positive news is that the government has consulted on introducing a new level of protection, which could be in place by the end of the year. At the moment, if you’re taken in by a scammer and ask your current pension scheme to move your money, they can warn you it’s a scam, but you can often still insist you want to move anyway.

“Under the new rules, schemes would have the power to block transfers to out-and-out scams that raised a red flag. And for those that raise an amber flag, they could refer you to the Money and Pensions service, so someone independent can talk you through the possible scam risk.”

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