5 types of fraud that students are vulnerable to

When it comes to financial crime, scams and fraud, students are often a key target. It’s a concern that due to the Covid-related increases in distance learning and time spent online, some students are in less contact with their peers and university/college staff; in other words, the people who may recognise if a student has fallen victim to fraud. 

So it’s more important than ever that students are aware of the types of scams they may be particularly vulnerable to and feel equipped with the knowledge needed to spot warning signs. 

Alex, an Intelligence Analyst within the National Fraud Intelligence Bureau (NFIB) at the City of London Police, explains:

• Five types of fraud students are particularly vulnerable to
• Ways students can protect themselves against these scams and advice that support staff can offer
• How support staff and students can report fraud and financial crime, plus further resources to signpost students to

The City of London Police Force is the national policing lead in England and Wales for fraud and cybercrime. Its NFIB sits alongside Action Fraud and identifies serial fraudsters, organised crime gangs and emerging and established crime threats by analysing millions of reports of fraud. This insight enables the NFIB to identify types of fraud frequently targeted at specific groups, like students.

1. Investment fraud 

Students are perhaps not the first vulnerable group that comes to mind regarding investment fraud; many likely do not have substantial sums to lose. But the victim demographic for investment fraud has shifted in recent years and it has become a very real and common threat to students and young people. 

Whilst in general, the funds students are losing are less than in instances of older victims, the impact is proportionately just as powerful since they are often less financially stable and unable to withstand a loss.

Why are increasing numbers of students falling victim to investment fraud?

Traditionally, commodities used in investment scams included stocks, shares, wine, energy and land. Fraudsters would create bogus companies through which to promote these. But nowadays, scammers are using social media to save time, reach more people and appear more convincing, often on Facebook, Instagram, Snapchat and Telegram amongst other platforms.

In a recent NFIB report, it was found that in 47% of the investment fraud cases where social media was an enabler, the victim was aged under 30.

Victims can be drawn into these schemes because fraudsters post pictures that display examples of wealth (bundles of cash, expensive cars, watches, etc.) to promote the scam. 

Another reason why increasing numbers of students and young people experiencing financial hardship are falling victim to investment fraud is due to the promise of ‘quick cash’ – a claim that often features prominently.

Examples of investment fraud scams for students

Common fraudulent investment scams for students include: 

• Bogus services such as ‘money flipping’ – where the victim is told to deposit a small amount of money, and the scammer claims that within a short space of time it will be doubled, tripled or quadrupled.
• Fake cryptocurrency schemes – frequently used to target younger victims, with the promise of big returns. In some instances, the victim will be told that they have made a profit from their cryptocurrency ‘investment’, and are shown fake numbers on a screen, which encourages them to deposit more. When the victim tries to withdraw their funds, the fraudster will sever all contact and no money will be returned.

2. Job and internship advance fee fraud

The nature of ‘advance fee fraud’ is always the same: victims are advertised or offered a product, service or opportunity, but before they can take advantage of it, they must pay an upfront fee.

Job and internship advance fee fraud is one that students and young people can be particularly vulnerable to. In these cases, an opportunity (usually a highly desirable, entry-level role) is advertised somewhere online, including on social media and legitimate job-advertising websites. 

When the student enquires, they’re asked for a CV and/or cover letter, which the fraudster claims they will pass onto the employer on the student’s behalf. The fraudster then gets back in touch and tells the student that they have either been successful or invited to an interview. At this point, they will ask for a fee (citing reasons such as commission for finding the role, service or administration fees, vetting or referencing fees). The student will be put under pressure to pay or told they risk losing the opportunity.

The student may also be asked for ID with the claim that it’s for the purposes of validating that they are able to work in the UK. In reality, the identification will be used for other nefarious and fraudulent purposes, such as loans and other services taken out in the victim’s name.

Advice for students to avoid job and internship advance fee fraud

• Exercise caution when asked to pay in advance
• Speak to your university or college’s Support Services, who may be able to verify the validity or signpost you to another department who can help
• Ask ‘agents’ which agency they work for – independently research the agency and contact them yourself using separate details
• Contact the organisation purporting to offer the opportunity directly to check it exists
• Always remember that if it sounds too good to be true, it probably is!

3. Rental fraud

Another type of advance fee fraud is rental fraud. For the financial year 2019/20, there were over 8,000 reports of rental fraud, resulting in a combined loss of £24.5m for victims.

Prospective tenants can be tricked into paying advance fees and deposits, with common scams including rental ‘contracts’ offered for properties that don’t exist or that are rented to multiple victims at the same time.

Students are often targeted due to the need to live away from home for the first time, inexperience in renting and the frequently competitive nature of the student rental market. The NFIB sees an increase in reports of rental fraud around the start of each new academic year.

Advice for protecting against rental fraud

• Don’t send any money for a rental property advertised online if you have any doubt about whether the advertiser is genuine
• Research the agency and check they are registered in the UK
• Visit the property with an agent or landlord – if you’re not local to the area, perhaps ask a reliable contact, friend or relative to check the property exists and is available
• Speak to your university or college’s Student Housing department as they will have knowledge and expertise about the local market – especially if you need to secure accommodation in the UK from overseas
• Ask for copies of tenancy agreements and any safety certificates such as gas, electricity or HMO licence
• Transfer funds only after obtaining the account details by contacting the landlord or agent directly after the above steps have been followed
• Be sceptical if you’re asked to transfer money via a money transfer service like Western Union

4. ‘Ishing’

Types of scams that fall under the ‘ishing’ umbrella are:

• Phishing – fraudulent emails with malicious links or attachments or that try to convince the victim to disclose personal details
• Smishing – same as above, but the communication method is via text message
• Vishing – a victim receives a fraudulent telephone call or voicemail

Students are often specifically targeted in ‘ishing’ fraud. In one recent example, suspects have contacted students claiming to be HMRC by sending a text telling students they are due a tax refund and asking them to supply their bank details. In 2 months alone, HMRC received 5,000 reports of this scam!

Tips when receiving an email, text or call

• Don’t click on any links!
• If you do click a link, never supply any information on the website that may open
• Do not open or download any attachments that arrive with the communication
• Do not reply to the same number or contact the senders using the supplied contact details
• If you are expecting communication, respond having independently researched the contact details online – if you receive a phone call and you’re unsure, tell the caller you will contact them yourself (if they are genuine, they won’t mind)
• Try to use a separate email address (and never use your student email address) to sign up to newsletters, guest lists, discounts and deals – keep them separate from the account you use for your student loan, banking, and contact with close friends and family

5. Money mules

The fifth type of financial crime that students are often a target of is money muling. Criminals use money mules for money laundering (the ‘washing’ of the proceeds of crime through a seemingly innocent bank account so that funds appear legitimate). 

Money mules can be entirely innocent parties, led into believing the funds are part of a legitimate business or a job they’ve signed up for. But they risk becoming the subject of a criminal investigation and possibly prosecution.

The process starts with a money mule agreeing to share their bank details. A sum of money will then be deposited into their account with the view of them sending it on to a further party. 

Students are often targeted since to avoid appearing suspicious to banks, fraudsters often seek people who don’t have a history of criminal activity and either have good, clean or non-existent credit history. 

How are students targeted for money muling?

1. Job adverts

Criminals will post job adverts online on social media, local pages ads, and legitimate job-advertising websites. These will usually be quite vague about the work required and buzzwords typically include ‘work from home opportunities’ and ‘easy money opportunities’.  

An example is the mystery shopper job scam. The fraudster will purport to work for a company contracted to test a bank’s customer service skills. They’ll send money to the victim’s bank account and instruct this to be immediately sent onto another bank account. 

The mule will be paid by taking a commission from the sum before transferring it on. The scammer will claim that the purpose of the process is to test the bank’s transfer times and that they need someone who is already a customer of the bank to be the ‘mystery shopper’. 

2. Mobile phone contracts

In these instances, the money mule will be provided with funds and asked to use them to take out several mobile phone contracts. The fraudster will arrange collection of each mobile phone; they’ll then sell the phones to obtain clean funds or use them for other criminal activity. 

The mule will be left with several, sometimes long-term, contracts in their name that they’re liable to pay for. This can impact severely on their credit history, result in a frozen bank account and affect their eligibility for credit in the future. 

Advice for students to protect themselves against money muling

• Don’t give away any bank details unless you know and trust the receiver
• Do not transfer funds received from an unknown party or employer to somewhere or someone you don’t know 
• Never let anyone access your bank account – alarmingly, nearly 1 in 7 students have shared their pin number with someone else!
• Be cautious of unsolicited offers of easy money – a common tactic used by criminals to recruit money mules
• Take your time to think and remember that letting someone else use your bank account is a potentially serious crime that could damage your financial future – is it worth it?
• Remember the simple rule of thumb about offers of easy money: if it looks too good to be true, it probably is

How can support staff and students report fraud and financial crime?

Throughout England and Wales, the best way for members of the public to report fraud is by reaching out to Action Fraud (the public-facing ‘inroad’ to reporting fraud to the police). 

This can be done through Action Fraud’s online reporting tool or by calling 0300 123 2040.

Fraud can also be reported locally through a police station or via 101. But as a first step in most instances, the local police force will either signpost you to Action Fraud or make a report on your behalf.

This is because when equipped with information about fraud happening across England and Wales, Action Fraud can identify widespread and large-scale activity. It’s harder to recognise trends and prolific fraudsters if reports of financial crime are confined to just the local police force of certain areas. 

The process is slightly different for support staff and students in Scotland (Police Scotland aren’t part of Action Fraud, although they do work closely together). To report fraud or financial crime in Scotland, please call 101. 

Ways to contact and get information from Action Fraud

What happens when fraud or financial crime is reported?

Action Fraud will provide the reporter with advice. 

Following a report of fraud or financial crime, the information will also be passed to the NFIB for analysis – a separate entity to Action Fraud (run by the City of London Police).

It’s the responsibility of the experts at the NFIB to cross-analyse all reports that come in and match them with other reports from all areas to identify the criminals behind the scams. The information is then passed to the local police force for investigation.  

While not every report results in an investigation, each one helps the NFIB build a clearer picture and work towards prevention by ensuring the UK is a hostile place for fraudsters to operate in.

Further resources and support 

Watch the recording of Alex’s training session for university and college staff, ‘Keeping up with financial crime & scams’:

Access the slides from the session here.

Further resources to signpost students to:

• actionfraud.police.uk – find advice and report financial crime and fraud 
• Action Fraud’s social media channels
• Sign up for Action Fraud alerts – receive relevant alerts about new types of crime or those increasing in severity 
• Cyber Aware,  National Cyber Security Centre and Get Safe Online – advice on how to stay secure online
• Take Five – advice to help prevent email, phone-based and online fraud
• Reverse image search tools including Google and Tiny Eye – to help recognise a fraudulent advert by checking whether an image appears anywhere else online (there’s also a mobile version here)
• ‘Shark’ – a video funded by England’s Illegal Money Lending Team to raise awareness of how easy it can be to become the victim of a loan shark 
• stoploansharks.co.uk – information and advice on loan sharks and illegal money lending
• ‘Quick guide to scams’ downloadable factsheet 
• Scams learning pathway in the Blackbullion platform

Further resources for support staff:

In addition to all the above resources, check out this blog on Supporting students with loan sharks and illegal money lenders.

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