Cost of living crisis: the six scams businesses need to watch out for

“The current crisis surrounding the cost of living has given rise to some malicious new scams that businesses must protect themselves and their employees against” says James Turley, our Fraud Awareness Analyst.

With many business owners concerned about rising costs, several predatory new scams have emerged to prey on those fears.

Citizens Advice reports that more than 40m people have been targeted by scammers this year – a 14% increase compared to last year. Meanwhile, Action Fraud has obtained figures from Which?, revealing crime reports mentioning one of the ‘big six’ energy suppliers rose 10% in the first quarter of this year, compared with the same period last year, as criminals try to exploit the current crisis.

But energy cheats are not the only threats facing UK businesses. Here are some of the most common new scams businesses need to be aware of.

1. Energy-saving devices

Businesses looking to save on energy bills could be targeted by fraudsters selling hardware solutions to rising energy costs. According to Which?, some of these phony devices have even been found for sale on eBay and Amazon. Which? says it found “no evidence” any of the devices it tested would shave money off energy bills.

What to do

  • Look for a CE/UKCA marking on the product to ensure the item meets safety standards before plugging it in or turning it on.
  • If you believe you’ve been duped into buying a fake device, stop using it immediately.
  • If you paid for it by credit or debit card, you may be able to claim a refund using chargeback or Section 75 of the Consumer Credit Act.

2. Shopping vouchers and discounts

Several major supermarkets, including Tesco, Waitrose, Lidl and Aldi, have warned customers about fake voucher offers that are preying on people’s fears about the cost of living. A link in a bogus email, text message or social media post will take someone to a survey, which asks for personal details such as log-ins and financial information, so they can receive discount vouchers or refunds for goods and services.

What to do

  • Never click on a link unless you can be sure it’s safe.
  • Take a look at the official social media accounts of your preferred retailers and suppliers – they often post warnings to customers about bogus offers.
  • If you find nothing online, contact the retailer to notify them of the scam.
  • Remember, if it looks as if it’s too good to be true, it probably is.

3. Energy tariff refunds

Action Fraud has issued a warning about fake text messages purporting to be from energy regulator Ofgem, offering a £400 rebate on their energy bills.

It has also written to all energy suppliers asking them to inform their customers about the scam texts, including what they should do if they receive one.

The scam does have a basis in reality. In May, then Chancellor, Rishi Sunak, announced that households with an electricity supply would receive a £400 grant in the autumn, but this is scheduled to be paid in instalments and credited to their account. The scam text asks people to click on a link to complete their application to receive the grant, including inputting their bank details.

What to do

  • Remember that Ofgem will never text or email anyone to sign up for rebates or refunds.
  • Consider that your energy supplier already has your payment details on file and will never send an unsolicited email or text requesting them.
  • Always read the full underlying email address or number of the sender, and don’t be afraid to call your energy supplier, using the number on its website or your bill, to query suspicious correspondence.

4. Fake jobs

Scammers are capitalising on workers looking for extra ways to earn money in the current economic climate. They pose as marketing companies and post ads online, which promote easy ways to earn money in your spare time. These scam companies may ask you to pay a deposit to be assigned tasks, which they claim you will make back within a matter of days and weeks once you’ve completed those tasks. They may also request your bank details to set up salary payments, giving them access to your account information.

What to do

  • Genuine businesses care about looking professional, so check any documentation for poor spelling and grammar.
  • Look into official records to confirm that the organisation offering work actually exists. If it does, contact it directly to confirm the job offer is genuine.
  • Don’t give out personal information (full address, date of birth, national insurance number) until you can have a face-to-face conversation with the recruiter.

5. Insurance broker fraud

Social media has led to a surge in the number of fraudsters posing as insurance brokers and offering unrealistically good deals on premiums. These “ghost brokers” take payment for cheap insurance policies but never actually arrange cover for the victim. More than 500 cases of ghost broking, with losses totalling £1m, were reported to Action Fraud in 2021.

What to do

  • Beware of brokers advertising cheap deals on social media or making unsolicited approaches via text.
  • Search the Financial Conduct Authority (FCA) website database for the name of the firm. All legitimate insurance broking businesses within the UK should be registered with the FCA.
  • If you believe the firm is bogus, report it to the FCA and Action Fraud.

6. Bogus debt collectors

The collapse of many smaller energy companies in recent years has created billing confusion that scammers are cashing in on. If your business has been affected by a change in energy provider, you could be targeted by fake debt collectors demanding non-existent outstanding payments.

What to do

  • Contact your energy provider to ask whether there is an outstanding debt on your account.
  • Be suspicious if the collector asks for information it should have in relation to your supposed “debt” – if it’s a legitimate debt collection agency, it is likely it has access to this information already.
  • Don’t be strong-armed into make an immediate payment, particularly if the debt collector requests payment over wire transfer.
  • Do some research on the debt collector by searching online for their phone number and company information.

Support for your business as costs rise

If you feel under pressure with rising costs, you’re not alone. Find services, resources and guidance, which could help you adapt, cut costs and plan ahead. 

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of NatWest Group, as of this date and are subject to change without notice. Copyright © NatWest Group. All rights reserved.

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