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Law360, London (March 27, 2020, 1:52 PM GMT) -- Britain's finance watchdog has warned that financial services companies could be taking advantage of money worries created by the coronavirus outbreak to dupe consumers.
Financial fraud will be more sophisticated and will typically start to appear after the initial shock of a major event, the Financial Conduct Authority warned on Thursday. It said consumers should be particularly vigilant about financial scams, including life insurance fraud, in the coming months.
"You may have already seen reports of fraudulent activity around the sale of face masks and hand sanitizer," the FCA said. "Scammers are sophisticated, opportunistic and will try to get personal details or money from victims in many ways," the watchdog said.
Fraudsters typically target those who are more vulnerable to being scammed, and could take advantage of the fact that so many people in Britain are at home for the foreseeable future, the City regulator added.
The FCA urged consumers to watch out for scammers offering non-existent short-term loans in exchange for an upfront charge, known as advance fee fraud.
Consumers should also be careful of companies offering life insurance during the crisis, as they could be "clones" of regulated firms looking to swindle vulnerable customers. The FCA also warned of so-called good cause scams, in which fraudsters offer investment in treatments for coronavirus or essentials such as hand sanitizer.
Scammers may also take advantage of stock market volatility by pushing investors into moving their money into dubious investments. The regulator said fraudsters may also take advantage of the large number of insurance claims that have arisen out of the coronavirus outbreak.
"Scammers may contact you claiming to be from a claims management company, insurance company or your credit card provider," the FCA said. "They may say they can help you recuperate losses by submitting a claim, for the cost of a holiday or event such as a wedding canceled due to coronavirus."
The watchdog said such scammers will ask consumers to hand over money or bank details. They should also watch out for cold calls, emails or WhatsApp messages stating that a particular bank is in trouble because of coronavirus and advising consumers to move their money to a new bank.
Coronavirus has now infected more than 500,000 people worldwide and more than 11,000 in Britain. It has hit the insurance sector hard, with the Association of British Insurers saying Friday that insurers cannot afford to cover all losses related to the pandemic.
The ABI said Tuesday that travel insurers in Britain could be hit with a bill of at least £275 million ($329 million) in claims over the crisis, the highest pay-out on record for passenger flight cancellations.
--Additional reporting by Najiyya Budaly. Editing by Ed Harris.
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