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Why financial scams may be the biggest cyber-threat to your children

Cyber criminals are targeting young people and exploiting their naivete and fondness for social media to make money illegally. Our Digital Parenting guide warns about the latest scams and shows you how to avoid them.

When Michelle’s 17-year-old daughter, Charlotte* wanted to help out a friend, she found herself at the mercy of a money laundering scam and ended up ruining her credit rating.

“I was extremely angry she had been so gullible but it shows just how easy it is to get scammed,” Michelle, from Norwich, explains.

“One of Charlotte’s friends – Sara – said she needed to transfer some money to another friend. Sara said that her bank wouldn’t let her do it. So Sara asked if she could transfer the money to my daughter, and then Charlotte could send it on.”

Unfortunately, the cash Charlotte was sending wasn’t Sara’s at all – it was stolen cash, routed through Sara’s account and then Charlotte’s to ‘launder’ it before it could be spent by a fraudster. Sara had responded to a job advert offering her money to route cash sums through her friends’ accounts. Charlotte was an unwitting accomplice.

Charlotte had been targeted as a ‘money mule’, a problem that is on the rise among young people according to fraud prevention group CIFAS. In some cases, paid ‘mules’ can end up with a prison sentence, while even Charlotte’s unknowing involvement had consequences.

“Within hours her bank account was frozen. Her credit rating was ruined before it even started. We’re now trying to build it back up, but it’s hard,” Michelle says.

Fraud graphic

Credits: Shutterstock

Charlotte isn’t alone in falling for a financial scam when young. Recent figures from the Financial Conduct Authority – the UK regulator – show that young adults have been disproportionately affected by a recent spate of coronavirus-themed financial scams.

Research shows that 16% of 18-24 year olds paid out money, compared with just 1% of those aged over 55.

Cyber security expert James Bore, of Bores Security Consultancy, says that teenagers are particularly vulnerable to scams, not just because they are young and naïve, but because they rely so much on the approval of their friends. This weakness can be used to target their passwords and personal data.

He adds that it is particularly important for parents and carers to recognise the different types of scams targeting young people.

“Phishing and online scams are designed to attack your emotions, bypassing any rational thought,” he says.

“With teens or young people, there is a definite tendency to experience stronger emotions, which makes it all the more important to be alert for the warning signs and not let people manipulate or abuse them.”

Recovery code scams

One of the newest scams on social media is the ‘recovery code scam’, which allows a fraudster who has gained control of one person’s social media profile to use it to gain control of many more, warns Mr Bore.

This scam exploits the Trusted Contacts feature on Facebook, which allows you to choose three-to-five friends who you trust to help you recover your account in the event you get locked out.

The victim receives a message from someone who has already taken over a friend’s Facebook account. The message from the ‘friend’ claims that they need help getting back into their own account, and asks the victim to check his or her email for the recovery code that will let them back in.

Once you have agreed to do what someone else wants once, you are instinctively more likely to do the same again

(James Bore, Bores Security Consultancy)

But the scammer then goes to the victim’s Facebook profile and attempts to log in, clicking the ‘Forgot Your Password’ button. This triggers a recovery code sent to the victim that will grant access to his or her Facebook profile. The victim then sends the code to the scammer – believing they are helping a friend access their own account. Now the fraudster has full access to the victim’s account.

This gives scammers the ability to glean personally identifiable details that could be used to hack into bank accounts or carry out identity fraud. They can also the hijacked account to ensnare your online friends in a similar fashion.

Instagram ‘big win’ scams

Financial scams via Instagram and other sites are also common, with messages from ‘friends’ purporting to show that they’ve had a great financial win, prompting teens to consider investing, too.

Mr Bore says that parents should train their children to ask themselves some questions before they reply to requests on social media.

“Is this the first time I am being asked for this type of thing by this person? If so, you should take a step back and think the situation through,” he advises.

“If you know the person, contact them through some other method. So if they’ve messaged you about a ‘great financial win’ they’ve had over Instagram, then give them a call instead of messaging back there.”

Money mule scams

Figures from CIFAS, the fraud prevention agency, show that 14-18 year olds are being recruited as ‘money mules’ on social media, with the young people being given a cut of money in return for moving it through their bank accounts to make transactions look less suspicious.

Sometimes, as with Charlotte above, money mules are completely unaware of their role, while other teens are seduced by the thought of making extra money. Those involved are in danger of prosecution.

To avoid getting involved, young people should be told never to send payments for a friend.

“Once you have agreed to do what someone else wants once, you are instinctively more likely to do the same again,” he says.

Coronavirus based scams

The Financial Conduct Authority (FCA) says that the coronavirus pandemic has given fraudsters an opportunity to create new scams.

Debbie Barton, financial crime prevention expert at financial services group Quilter, describes the pandemic as “a boon for scammers”.

Covid-19 Fraud and Scam graphic

Credits: Shutterstock

“Unscrupulous fraudsters have sensed an opportunity in the past year to exploit the uncertainty and disruption caused by the pandemic to tempt people into handing over their hard-earned savings,” she says.

“Over 1.4 million people say they paid out money after receiving an unsolicited approach involving COVID-19.”

Hopefully, children are less vulnerable to this type of scam as they are currently not scheduled to be given vaccines.

A solution for every scam

Whatever the scam, Mr Bore says there is one simple fix that works every time.

“If you are contacted and asked to do something, request a reference number and say that you will call, or email, the official contact details. You can find these on an organisation’s website, and should never use the ones that someone gives you during the call.

“A lot of scammers will try to talk you out of this, using various threats and bluster. If it is a genuine call, they will always be happy to provide details and wait for contact back.”

Teach your children this, and they won’t go far wrong.

Where to get scam support

  • If your child is a victim of fraud, try independent charity Victim Support for confidential support.
  • For more resources on how to stay safe online, try the Get Safe Online website for advice on how to help children navigate the online world.
  • The NSPCC website has information to help children to navigate online safety, with content aimed at financial safety as well as avoiding sexual abuse and violence.
  • The Citizens Advice Scams Action Service can help with reporting a scam, or if you need advice.
  • The  FCA Scam Smart service concentrates on investment scams, including social media based online trading scams, sometimes targeted at children.

Click here for more Digital Parenting features and for more useful resources visit the main Digital Parenting site.

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