Crypto-Related Fraud and Mortgage Arrears

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Hello, welcome to this Moneybox podcast. The listener who organised a mass North Sea skinny dip to raise money for charity, but the Department for Work and Pension said she'd be stripped of her benefits because the money she gave to charity counted as... And four major lenders put up mortgage rates. In the same week, the Bank of England says mortgage arrears have risen to a seven-year high.

But first, the number of victims of fraud where cryptocurrency has been used to steal their money has more than doubled. in just four years. Figures seen exclusively by Moneybox show the amount of money being stolen has also sharply increased. Dan Whitworth's here. Dan, for puzzle listeners though first, what is cryptocurrency? Okay, Paul. So cryptocurrency, or crypto for short, is a digital currency, so it only exists online.

So unlike traditional currencies like the pound or the dollar, for example, they're not backed by central banks. Now, this makes it popular for people who think that brings financial freedom, but it also makes it very volatile and extremely difficult to recover, if not impossible. if it's stolen. Now, one of the most well-known and popular cryptocurrencies is Bitcoin.

Now, as for those numbers you mentioned, in 2020, figures from Action Fraud for England, Wales and Northern Ireland show that were around 5,000 reports of fraud when cryptocurrencies were involved. Last year, that more than doubled to over... Now, a lot of those were investment fraud. And how much money is being stolen?

Well, again, another massive increase in 2020. £85 million was reported stolen in crypto fraud. Last year, that had more than doubled to £175 million, although that was actually down substantially from 22 when... 330 million was stolen through crypto fraud.

Now, one of the victims from last year is Pat from South Wales, who's in her 80s. She had her life savings stolen, but following a Moneybox investigation, she was eventually refunded her money. Pat's now in hospital, but I've been to meet her son.

How are you? John. Hello, we meet at last. We meet at last. How are you? Hello, I'm John and I'm from Carmarthenshire. Lots of photos here, some from a long time ago of a glamorous young woman in a lovely black and white shot, some more recently. Who are we looking at here? Who's this? so this is my mum she's called pat and uh yeah she's she's quite a glamorous woman this is like an acting shot really it's like uh from the 1950s

So my mum is very creative. I mean, she was brought up in poverty. She left school at 15, went to London, lived in Brixton, then came back and met my dad. Then she sort of built a business, really, which is from a little counter in my grandfather's shop to quite a big business, which employed about 15 people. And then she built this house. That's a really lovely picture you paint of your mum. I'm obviously here...

Not for the good things that happened to your mum, but the bad thing that happened to your mum about a year or so ago. My dad is sort of getting dementia and he's had a series of many strokes and she was... just looking after him. And then she saw an advert for cryptocurrency and unfortunately she clicked it, which was the biggest mistake of her life. And then I think... The scammer got in touch, I think, the same day, and it was a woman called Sam.

So Ruthless was the scammer at grooming and manipulating Pat that over the following three weeks or so, she was subject to dozens of calls and kept on the phone for hours. During that time, the scammer stole Pat's husband's identity and used it to open an account with an online payments company. Then she tricked Pat into making more than a dozen transfers, totaling more than £70,000.

savings to that new account which the scammer then used to buy cryptocurrency pat never saw a penny of her money again it's basically like her life fell apart really she thought she'd have to sell the house because you know They didn't have any money to upkeep the house. Or to live. Or to live.

She didn't really want to talk about it because she felt that it was a betrayal and she didn't want people to know about it because she'd always been like a strong woman all her life. I watched my mum sort of fall apart because basically this... scumbag, took that away. You know, and why do they do these things? I mean, they're sociopaths, they're scammers. I mean, I'm a Guardian reader. I'd string them all up. Your mum's in hospital now.

But the investigation that we did, your mum has now been refunded this £71,850. So your mum's got her life savings back. Talk to me about the moment. When you heard mum's getting her money back. You know, I was like really relieved. I went to see mum and she just smiled, you know, and I haven't seen a smile, you know, for like, you know, a year or so. She just really smiled and it was really lovely.

So your mum's still in hospital, but she's getting a lot better and she's up for having a chat with us. So we're going to go and see her, right? Yeah, yeah. We can go and see her now. After a five-minute drive to the local hospital, we find Pat being looked after by the nurses and doctors and looking frail, but with a smile on her face. Well, it came as a hell of a shock, really, not a bit of a shock, because...

I'd been living in a house which was very quiet. My husband and my daughter, they were both unwell. And she came on like a friend. And I couldn't believe it, you know, I mean... People don't do things like that in my world. But I'm ever so grateful to you, actually, isn't it? Because you're the one. You're the instigator. So I was delighted. Absolutely. Pat.

smiling again and talking to Dan. Listening to that is Dr Elizabeth Carter from Kingston University, a criminologist and an expert in fraud. Elizabeth Carter, why do you think crypto fraud seems to be rising? More victims, more money stolen. Yes, there's a definite increase. And this is because ordinary individuals, ordinary folk are...

beginning to invest in areas such as cryptocurrency. The risk profile is changing vastly. It's no longer the realm of a niche investor or people that are really rich. Anyone can do it and they're encouraged to. And this is also something...

that's advertised on social media, so it's in people's faces all the time. Yes, and the amount doubled in four years, but actually last year, the year before last, it was higher and it went down last year. Why was there that spike of 330 million stolen in 2022? Now, this is really interesting. This is a hangover from COVID and lockdowns in 2020 and 2021. Now, investments naturally are relatively long term and fraudsters play on that fact. So when they take your money and they don't give it back.

It's seen as part of the normal context. And then by the time people realise that they've been defrauded of their money and it's not coming back, it could be one or two years later. And this is what has led to this rise in reports. Yes, you mentioned... Bitcoin becoming sort of more respectable, if you like. And, of course, it hit a new record price last week, over $73,000, £57,000. Do news items about record prices encourage people, perhaps like Pat, to think investing in it's a good idea?

They certainly do. And it becomes more of a credible alternative, rather than being something that's really risky. And particularly when traditional investments aren't giving a return that can keep up with the cost of living, people are turning more and more to cryptocurrency. And what's being done to tackle fraud?

Now, a lot has been done in the banks and continues to be doing so in terms of regulating banking practices, protecting victims from fraud. However, what's happening now is that we see horribly termed the cockroach effect we say in criminology. where the criminals are moving victims into unregulated spaces, such as investments in cryptocurrency. Yes. I mean, we've had an email this morning from Amanda who lost £29,000. She's asked us what to do.

Don't let people buy crypto from their current account. A number of others have restrictions on how it's paid for, how much can be bought. Should banks and other payment service providers impose tighter restrictions? It's a really tricky one here. On one hand, I believe they should impose tighter restrictions on what people can do, especially when it's in a very risky area. However, these fraudsters play on those narratives and they say the bank is trying to keep your money from you.

and you can have a better return. So we have to just give more information to the public, let them make more informed choices and the tools in order to do that. And if banks had to reimburse victims of fraud using cryptocurrencies, as they do for other things, would they? Would they become better at stopping it?

Well, there is that motivation there, certainly. And I do think that tighter regulations is absolutely essential. And no fraud had happened if individuals didn't take that first step, what Pat's son called, you know, the worst mistake of her life. What can people do if they think they might be getting calls or seeing adverts that tempt them?

Well, there's a couple of things here. Number one, talk to family and friends. They are often outside of that social engineering. They can see it. They're outside of that context. Number two, pressure, urgency. If you're being pressured into making investment, stop. Nothing is that urgent. And most importantly here, make sure that you consult an independent financial advisor who is FCA Financial Conduct Authority authorised because this is regulated advice that you can trust.

Dr Elizabeth Carter from Kingston University, thanks. Or just put the phone down, as I sometimes often say on Moneybox. And now, another rare bit of Moneybox advice. Everybody strip off, get your kit off Everybody strip, everybody strip Everybody strip at the skinny dip Everybody strip, everybody strip Everybody strip at the skinny Well, are you ready to get naked in the North Sea? I'm certainly not, I can tell you. But each September at sunrise around the equinox, those singers are...

by over a thousand others to plunge into the freezing water naked in that north-east skinny dip which raises money for the mental health charity Mind. Now, listener Jackie Higginson from Sunderland has organised this event. Thank you. and had to claim Universal Credit instead. Now that's run by the Department for Work and Pensions and it told her that Universal Credit rules will count the money she raises for charity as her income.

even though she gives all the profit to mind. And as a result, in the months around the skinny dip, for most of the year, she would be stripped of her universal credit. Well, Jackie's... with us now. Jackie, lovely to talk to you and I must ask you first, what's the appeal of plunging naked into the North Sea with a thousand strangers? The North East Connecticut is so much more than just running naked into the sea. It's a celebration, really. It's a celebration of life and of nature, of health.

of courage and of our freedom. And of being cold. How much has he raised for mine since 2012? Since 2012, together we have raised over £140,000 for mental health charities. Goodness, that's extraordinary. And how does it work? People buy a ticket from Eventbrite. What happens to that money? That's right. Yeah, I call it a pledge. I like to think of it as a pledge. But as the event grew, it did have to become a ticketed event for safety reasons.

So I invite people to make a pledge of £15 to take part and all profits. all proceeds from that donation will go directly to Tyneside and Northumberland Mine. Yes. I also offer a donate what you can option for the low wage so that it's... Available to all. People can donate less or indeed more if they can afford it. But you pay yourself a small amount. The money from ticket sales is paid to you and it's in a separate account but in your name. When you claim tax credits, was HMRC happy with that?

that yes it was never a problem so but now you've gone on to universal credit there's a person at the job center they're called a work coach you report to them what did they say to you about it I had my first meeting with my work coach a couple of months ago and I was told that I must declare all of the money that I fundraise as my personal income.

I was told that I was running a business and that it was my choice to give the money away to charity. And can you can you appeal against that decision? I've tried to discuss it, but there doesn't seem to be any opening for discussion. And the only option I was given...

was to make a note in my journal explaining the situation and to request that my case be referred to a decision maker. And what financial effect would that have on you with all that money? I mean, how much did you raise last year, for example, if all that counted as income?

Well, in total, we raised almost 40,000, but some of that is raised via a fundraising page. So it doesn't all come to me. No, but that would really practically wipe out. A lot of money would sit in my account, yeah, during the months of... running up to the event. And wipe out your benefit completely. Yeah, I don't know yet how it would affect my claim or the money I receive, but at the moment I'm expecting it to stop it completely.

Jackie Hickinson, thanks for talking to us. Sorry to rush you. Well, we contacted the Department for Work and Pensions. It told us Jackie's case is complex, it's being investigated and she will be contacted in due course. With me in the studio is Devon Galani, Director of Policy in Practice.

organisation which helps people understand and indeed claim benefits they're due. So, Dib and Ghilani, Jackie's case, obviously, a slightly unusual one. They're all self-employed people who are different, I suppose. What do you make of her situation?

Well, it is complex. But firstly, let me say it sounds fantastic. So I'm not sure if it's my cup of tea, but it's brilliant to grow an event from. I think it was 50 people in year one to over a thousand people today. So I think that's the first thing to say. And finding ways to encourage people to take those first steps into work.

It's something that, you know, fundamentally I think DWP should be looking to do. I think the difference in Jackie's case from the way it was treated as tax credits is HMRC took a very kind of hands-off approach to self-assessment. And what you see there is it has its...

strengths and downsides. Downsides can be people left with big overpayments at the end of the year if they haven't declared what would otherwise be income. But they tend to take a much more hands-off approach, whereas DWP takes a different approach. around monthly assessments so they're looking looking at income and outgoings in a particular month and that's what they're doing in this case so if Jackie's raising funds and that's sitting in her account that

DWP may well see that as income in that monthly assessment period, and that would count against a universal credit. And I think I've talked about it with a few colleagues. It is complex. Ultimately, it's DWP. It needs to be explored with DWP. But I think separating out the donations... from maybe the income she sets aside for actually doing the work.

is one way in which you could make this clearer to DWP, perhaps. Yes, and she's obviously thinking she might try and get it changed, but that can be a complicated process, can't it? And the government tells us Universal Credit recognises that self-employed people experience periods of fluctuation.

earnings but you know several people have been in touch another one a musician she's a musician worried that her irregular work means a lot more effort she has to work it out every month whereas normally with yourself employed it's every year that you have to sort it out Is putting people off claiming universal credit once they're...

tax credits stop? Yeah, I think there's a real risk. And you can see it in some of the numbers. I think DDP are recognising that far more people, they're expecting far more people to move from tax credits to universal credit. And I think over 20% aren't. that they would have otherwise expected to. So that's kind of one in five people that they expected to be on universal credit that are choosing to opt out. I think it's a real shame. What I'd suggest to people who are making that move from...

tax credits to universal credit is that firstly you've got 12 months to look at your situation so if you've got savings you can still move across and they won't look at that for 12 months if you've got in this case fluctuating earnings or or low earnings they'll

set aside rules around the minimum income floor for 12 months. So you've got time to move across to universal credit, get some proper advice. And ultimately far more people, it is the replacement for in-work support. So far more people are able to claim. Universal credit. And very briefly, you say get advice. She obviously needs advice about appealing, if nothing else. Where from, very briefly?

I think mandatory reconsideration is probably the first step. And afterwards, you can go to tribunal. But I do think you can... Like a work allowance would be an incredible way for, it's a part of universal credit. It means you can do some work without your benefits being affected. So you're calling for a change in that. Devon Galani of Policy and Practice, thanks. And our thanks to sisters Isabella and Gabriel Warburton-Brown for that skinny dipping song. It's still in my head, I must say.

Now, mortgage arrears have hit a seven-year high. New figures from the Bank of England show that in the three months, October to December last year, people paying £20 billion of mortgages were behind with those payments. That's a rise of 50% in the number with... arrears on the same period a year earlier. We've reported before on Moneybox about rising mortgage rates and after recent falls it now seems they're rising again. This week...

Four major lenders raised mortgage interest rates. Dan asked people in Worcester how they were coping with their mortgage costs. So I went from £700 a month to £1,500. Not on a fixed because I thought I'd ride it out, but I'm on a 7% from a 1.1. And how long have you been dealing with that increase for? That was October for me.

So the last few months, and with my bills on top, I'm paying about £2,000 a month. What kind of impact is that having on your monthly budgets? Yeah, massive. I already worked two jobs. It's gone up unbelievably over the last couple of years, really. How much were you paying and how much are you paying now every month? I was probably paying about £5.40 and I'm paying something like about £6.90. You just make cutbacks, don't you? Because you've got no choice. You've got to find the money.

What sort of cutbacks are you having to make? Food, socialising, petrol, wherever you can find us. Luckily, we got a five-year fixed rate on about 1.96. About three years ago, and I did a five-year, my bank talked me into it, saying, why not? Because I'd always done two. If our mortgage went up now at 5% or 6%, depending on what sort of deal we got, it would be a bit of a problem for us because we've got childcare costs and things as well. So, yeah, it would be a worry.

Bleak news from Worcester this week. Charlotte Harrison from Skipton Building Society told the Today programme why she wasn't too worried about the new mortgage arrears figures. I think the headline of 50% uplift in arrears can probably sound quite alarmist in the market and understandably cause concern. But when you look at the data beneath that, the numbers presented in terms of the proportion of accounts in arrears is still very...

very modest, just over 1% of all mortgage accounts in arrears. So it's something that we're paying close eye and attention to. I think the key thing is that the support is there for customers that are experiencing any form of financial difficulty and financial challenge. but it's still a very low percentage of our customer base.

Well, listening to that is Peter Komalafe, financial expert and author. Peter Komalafe, just under one in 80 on my calculations have outstanding balances in arrears. Highest it's been for seven years, but it still means 99% nearly a notch. arrears is charlotte harrison right not to be concerned to a certain extent i think so yes but i think for the for the people who are staring down the barrel of possibly being in arrears it's still a real

something they're looking at. So there is good news, though. There is the mortgage charter. which outlines that all banks have to provide some support for people who are struggling. And I think that's really the first port of call for most people who may be looking at this struggling. Yeah, she mentioned that there was help. And in fact, separately in that interview, she said that those numbers weren't increasing.

That was what she was keeping an eye on. So the mortgage charter is something you can go to your lender. You can say, look, I'm having problems. What can you do about it? And you say they have to do something. They do. So the mortgage charter has a couple of things in it. But one of the ones that I do want to highlight is the fact that lenders have to offer tailored support for people who are struggling.

And that could include offering things like payment holidays or offering them the ability to switch on to an interest-only mortgage. So it's really important to have that conversation to see what might best fit your situation. Yes, and of course, important to do that before you get in arrears. And the people Dan spoke to in Worcester, they weren't in arrears, but keeping payments up was a huge...

effort wasn't it one woman that had her mortgage doubled do you think this problem is going to get worse over the next year look it really depends on what happens with interest rates really to be honest and inflation and i think that's the underlying thing but we can't control that so what i always say to people is this you know 700 to 1500 pounds a month is completely unsustainable if you get to the point where you start to realize this is going to be a bit of a worry

The first thing that you need to do and the most important thing is speak to your lender early doors. Now, four major lenders, as I said, edged up their rates this month. They weren't massive increases, but they started going up rather than down. Are they going up because lenders are afraid of these rising arrears, which ultimately could cost them money?

It's not necessarily that. I think it's more about what the Bank of England is going to do with interest rates. And that is a little uncertain at this point in time. Rates went down because I think a lot of them wanted to kind of almost encourage more lending. But we're still at... the position where the bank rate is at 5.25 and that impacts how much they can borrow therefore how much they need to lend the money out

Yes. So you think it's not that. It's more looking or trying to foresee what the Bank of England is going to do. We all wish we could do that, don't we? Precisely. And, of course, mortgage rates still can be high. You know, 8.6% I saw for the standard rate. with some lenders. And just, you know, just to stress literally in 10 seconds, what to do if you're listening to this and you've got a problem.

if you do have a problem the most important thing is go and speak to your lender don't feel embarrassed don't feel ashamed pick up the phone and ask for help because they have to help you Peter Komalafi, thanks very much. And on Moneybox Live this Wednesday, Felicity Hannes here. She wants to know what you're doing to cope with rising mortgage costs. Cutting back, working more or budgeting for a future deal with perhaps fingers crossed. Email moneybox at... bbc.co.uk, leave a number.

If you can. Well, the Moneybox podcast team in Salford told me they're not heading for the Irish Sea or even the Manchester Ship Canal, which they can see. They're off for lunch. Your emails keep us on track. Moneybox at pbc.co.uk for all your stories. Thank you. with a BBC News money and work production for BBC Sounds. Now, where did you, and indeed I, come from? Hi, I'm India Rackerson and I want to tell you a story. It's the story of you.

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