Money frauds

I am always struck by the stories that victims of money scams have to relate. I've heard lots of them over the years on radio programmes such as BBC Radio 4's You and Yours and Money Box, and elsewhere, such as on LBC. 

The victims of big-money scams seem to fall into three main groups. 

There are those who are phoned out of the blue and told by their bank - or rather someone who claims to be their bank - that their accounts have been hacked and that their balances need to be shifted pronto into another account where the money will be safe. They are hustled by the caller, given no time to think, and of course the money is whipped away into the hands of fraudsters who control the 'safe' account, and it's never seen again. It's usually a successful sting - however sensible, level-headed or forewarned the victim has hitherto believed themselves to be. The correct response (I would say) is to put the phone down, travel to the nearest bank branch, and enquire in person with genuine bank staff. But I'm sure many people can't react so coolly when presented with a dire situation. (I dare say I would - or at least could - fall victim too: the psychological compulsion to take a safe and simple way out from sudden catastrophe, overriding all caution, must be overwhelming) 

Then there are those looking for a better return on their spare cash, who see attractive advertisements when searching the Internet, or on social media, and are enticed into a fake or worthless investment scam that sucks more and more money from them. The scammers intend to strip them bare, and if possible draw others in. I suppose it's hard to resist an apparently golden opportunity to make big money from trendy-sounding assets. Of course you have to possess a lot of cash to be attracted in the first place. (That theoretically means I should never fall victim of investment scams! All my small savings are for eventual necessary spending - the next car, the next bout of dentistry, the next pair of glasses. I will never now have a nest-egg in the background that I might risk losing) 

Thirdly there are the victims of so-called romance fraud. This is the cruellest scam of all, the victim being led up the garden path in the name of love and companionship and eventually asked to lend money to the person who has achieved ascendency over them. Oddly but typically, scammer and victim never meet: it's another online thing where all is taken on trust. The grooming process may extend to several months before the sting happens; but by then the victim may be too well under the control of the scammer (and his team) to refuse cooperation. I have met women - it's most often women who fall victim - who told me they immediately became wary as soon as money was mentioned. I've heard about women who questioned the reason they were being asked to give money to the scammer, but were cleverly and convincingly reassured, and persuaded to cough up just like the most gullible victim would. It's like a magic spell, and it all ends the same. They are left broken-hearted, embarrassed, self-doubting, and seriously out of pocket. (As I love my freedom, and never intend to give it up for the sake of having anyone special in my life, I'd like to believe I would be quite immune to romance fraud. But the sensible side of me says 'Remain on your guard!', and I am listening)  

There are many other types of money scam, big and small. But these three are the main ones I've heard about.

Now there's one thing that links them all: the victim has some money. And I've often wondered how the scammers know who they are, if they are trying to target those people who have enough cash to make an elaborate sting worthwhile. Have they, for instance, subverted amenable bank employees to put the finger on a likely sucker? If they can do this, it would be a very efficient way to select victims. I'm thinking particularly of the first kind of fraud mentioned above, where they impersonate the bank to panic the victim into moving funds to an account that the fraudsters control. But surely it would be a wonderful advantage to have a well-off would-be investor, or a lonely heart with money to spare, handed to them on a plate? 

Or do they leave it to pure chance, relying on the victim selecting themselves, either from greed or silliness? Such as responding to a social media advertisement, or to some YouTube video about how to invest very cleverly, or a great profile on a dating app? Cupidity and gullibility must work a lot of the time, human nature being what it is. Who doesn't pay at least some attention to the promise of a better return, or to finding the perfect partner? 

I can certainly see why most banks have long resisted compensation codes (and now coming legislation) to restore cash taken from money fraud victims. They know how irrationally people will behave when pushed or lured, and compensation costs them dear. But they now also see that rapid no-quibble compensation is going to be the name of the game, up to an £85,000 maximum anyway. They'll be forced to tighten their procedures and checks, to limit the leakage of serious money to scammers. And that, of course, means yet more inconvenience and delay for the public, whenever any non-routine transaction occurs. As when buying a house or car. Each money transfer will have to be thoroughly checked out, more so than now. Let's hope that no important transaction fails because a bank took too much time to satisfy itself that all was genuine. 

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To pay or not to pay, that is the question

Sophie, my 2016 Volvo XC60 R-Design car - bought nearly a year ago from Caffyns Volvo Eastbourne - was a Volvo Selekt car, meaning that she was among the pick of vehicles traded-in for something newer, and was not only a good-looking, cared-for, low-mileage example, but was running particularly well and reliably, all settings correct and everything working properly. 

That made her a good bet if buying second-hand. However, it also meant a buyer would be paying more than the ordinary price for having such a car. I reckoned some £1,000 more. But I was in a hurry to buy a replacement for Fiona, my previous Volvo XC60, who was old and ailing, and I'd decided that if I could quickly find another XC60 with the right engine (that is, the biggest diesel option, suitable for hauling the caravan) I'd go for that. The price was secondary, although the financing had to be affordable. I was lucky. Caffyns had exactly what I wanted, and I secured Sophie as soon as I'd had the test drive.

Part of the Volvo Selekt package was a one-year used car warranty. I didn't give it a lot of thought at the time of buying, but after six months of ownership, I was glad that I had that warranty. A rear wheel sensor that monitored ABS and all sorts of related things packed in while I was away on holiday in April. Once home again, I had Caffyns look at it. The part was simple to replace, but its cost, and the technician's time to fit it, would come to about £300. Ah, I said, that might be covered by the one-year used car warranty! And so it was. It was all done while I waited, after Volvo HQ had authorised the work, and cost me not a penny. 

So for once I'd invoked a warranty and had had a satisfying outcome. The warranty hadn't been needed since. But the good experience last April had stayed in my mind. 

Now, in October, it was time to consider extending that warranty for another year. I was getting reminders from Volvo to do so. I had to act before 24th October.

Clearly it could be very useful. The warranty was basically for original factory-fitted parts that failed unexpectedly or prematurely for reasons other than customer misuse or ordinary wear and tear. The sensor that failed was a very good example. It was unlikely to break so early in the car's lifetime; and there was no way a customer could deliberately or carelessly induce failure. So no quibbling about covering its replacement. Mind you, the position for other parts might not be so clear-cut. And there were a lot of specific exclusions. 

So was it worth buying an extension to the warranty? After all, mine was a quality car made with tough components by a car company famous for its long-lasting products. Sophie had enjoyed a careful first owner, and was now being driven just as carefully by someone who tended to cherish her cars. Driver abuse could be ruled out. 

But chance mishaps and failures can happen. So it seemed to me that the answer was yes - that is, buy a warranty extension - if the cost were reasonable. Say £300 for another twelve months. But to pay no more than that. 

This decided, I responded to the reminders and filled in an online quotation form. Surprisingly, they asked me what Sophie's current value was. (Didn't they have data on that?) Sophie was first registered in April 2016, and her cash price then, when seven and a half years old, had been £19,500. Now she was a year older still. A quick glance at some same-age XC60s for sale on the Internet suggested that her current value might be £14,500. I put that in. 

The form completed, I asked for my quote.

£899.

What? £899 to extend the warranty for twelve months? It was far too much. Maybe a business executive, or a high-flying smart young professional on £90,000 a year, would pay that kind of money without hesitation, at least on a newer car, but it was beyond my income bracket. Yes, I did actually have the money in my savings account, but £899 would deplete those slender savings too much. 

If the money would cover the next three years, that would be different. But no, it was only for a year. 

Why so much? Well, I had of course already made a previous claim. That would bump up the premium a bit. And as Sophie aged, the likelihood of other qualifying component failures would increase. Yes, I could see why the cost might be high. And get higher. 

The latest service and MOT - just done - indicated all was good, with nothing likely to fail. So I might easily spend £899 for nothing - and then similar amounts year after year. Rather than feeling warm and happy from insuring myself against unexpected part failures, I'd in fact feel robbed and a little resentful. It made more sense to build up my savings account instead. Then if nothing went wrong, I'd still have the money. 

Episodes like this always make you feel you are exposing yourself to the whims of fate if you don't pay up. But nothing is ever entirely risk-free, whatever you do. I felt that Sophie had already proved herself to be a good reliable car, and not one of those unlucky cars that always need fixing. So it was rational to forego the umbrella of an extended warranty, and instead to accept a small amount of risk.

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