5 Ways to Avoid a Universal Credit Scam

Universal Credit is a financial aid to help with your monthly living costs. You can rely on this aid when your finances take a severe hit. But what happens when scammers rob you off this money? Learn more about Universal Credit scams and how to protect yourself from one.

Many people have fallen prey to Universal credit scams at the hands of fraudsters offering government loans and grants. As per a BBC report, Britons have lost roughly £20 million owing to Universal credit scams. Formerly, experts anticipated that Universal credit would help reduce fraud by £1.3 Bn by 2025. On the contrary, data suggests that fraud is likely to increase by £1.3 Bn by the same year.

The rise in the number of Universal credit scams is alarming. So how do you protect yourself before this tragedy befalls you?

In this article:

What are Universal Credit scams?

• A Universal credit scam happens when you let someone apply for a Universal Credit advance payment on your behalf. Scammers suggest to people that Universal Credit is free money from the government, in order to lure them into their trap.
• Universal Credit advancement payment can round up to a full month’s Universal credit payment. However, scammers can take over 40% of this money as a charge for the ‘service’ that they supposedly provided.

This is how scammers contact you

• Many scammers have cracked the code to identifying people’s vulnerabilities. Some people reported that a well-dressed and sophisticated agent pretending to represent Jobcentre Plus visited them.
• Scammers also contact people through online portals through direct messages, advertisements, and social media groups. Some even claim to have a friend or a relative claiming who could expedite the application or approve it on your behalf.
• Cybercriminals have mastered the art of creating state of the art websites with government logos and testimonials, along with a seemingly legit social media presence.

Should I let someone apply on my behalf?

• If you are planning to apply for Universal Credit, there is absolutely no need for you to do it through a third party. Applying for Universal Credit is a pretty straightforward process. Involving a third person might complicate the whole process and can have serious consequences.
• First off, anybody who offers to apply on your behalf will charge a fee for their service. This fee may eat up 40% of the amount of money you receive through Universal credit. Now when you repay the advance to the Department for Work and Pensions (DWP), you will also have to repay the loss that the scammer’s fee incurred you. This will be recovered from your future Advance payments, leaving you short of cash. So, technically, you’re paying an overhead charge out of your pocket when you pay someone to apply for you.
• Secondly, your situation could worsen if you were never a Universal credit claimant in the first place. This would mean that the person claiming the credit on your behalf is an impersonator. However, you will be held accountable for the repayments since the claim was made on your behalf.

5 ways to protect yourself against Universal Credit scams

Advance payments are made available to citizens who are waiting for their first Universal Credit payment. Therefore, scammers will have a different approach than the conventional one when they target someone in a Universal credit scam. You can never be too careful when it comes to money matters. Here are some tips to help you save yourself from vicious scammers scavenging on your money:

1. Don’t involve a third person in your credit claim: If you’ve applied for your first Universal Credit payment avoid letting a third party apply for advance payments for you. The scammer would persuade you into letting them apply on your behalf and charge a high fee for their service. This could consume over 40% of the money from your advance payment and leave struggling till the next month.
2. Don’t share personal information with an unverified representative: Not everybody qualifies for Universal credit payments. If someone tries to tell you otherwise, don’t trust this person. Scammers often claim that they have insiders who can approve any claim regardless of the claimant’s eligibility. They would ask you to share details like your identity proof, National Insurance Number, and bank account details. This information is sensitive and can be used to forge your identity. Beware of such bogus claims and keep your personal information just to yourself.
3. Don’t give away too much on social media: Social media is a great way to connect with people. But it is also a peep-hole for people into your life. Avoid sharing special dates or names of your loved ones on these platforms. More often than not, people use these as passwords because such things or events are easy to remember. You may put your security at risk by sharing these details on social media.
4. Register your current address for voting: If you’ve recently moved into a new house, the first thing to do is registering to vote from your new residence. Scammers and fraudsters could use your former address to create new accounts and issue credit cards. You could end up with a pile of debt over this.
5. Monitor your post regularly: Monitoring your mail helps you keep track of your posts and important documents. If you check your post regularly, it’ll be easier for you to identify if something goes missing. If the post doesn’t arrive on the anticipated date, you will have substantial proof to back your claim. If you’ve moved to a new home, have your posts redirected to the new address immediately.

Common tips to avoid scams

• If you want to dispose off a document with your personal details on it, always do it by either shredding or destroying the key information.
• Don’t engage in a cold call or email asking for your personal information such as PIN, passwords, National Insurance Number, etc.
• Try to use unique and secure passwords for all your online accounts. Changing your passwords every 3-5 months is good practice.
• Read your bank statement with utmost attention each month to look for suspicious and unknown transactions.
• Do not indulge with someone who pressurizes you to act upon an offer immediately.

Conclusion

• If an offer seems like it’s too good to be true, it probably is. If you’re at a point in life where you’re claiming Universal Credit, it implies that any financial blow will impact you gravely. Thus, it is important to stay aware and alert about such scams. Scammers have improved their techniques and it can, sometimes, be difficult to differentiate right from wrong.
• For those who are claiming benefits, scammers may entice you by offering to apply for a loan or grant on your behalf. Instead, they make a Universal Credit claim in your name. Universal credit replaces a list of benefits, such as income support, housing benefit, jobseeker’s allowance, child tax credit, etc. If your Universal Credit claim gets approved, all the other benefits that you’re claiming will stop, worsening your financial situation.
• It is better to be safe than sorry, which is why you shouldn’t share your personal details with any third party service provider. For all you know, they may be scamming you off some much needed financial aid. It’s never wise to be too nice. Even if someone living in the same area has recently befriended you on social media, do not give out too much. Your instinct never lies, so trust your intuition and tread carefully.
• In the event that you’re targeted by a scammer and they rob your money, file a complaint with Jobcentre Plus immediately. You should also contact Action Fraud on 0300 123 2040. Alternatively, you could report using their online tool or the FCA Scam Reporting website.