Fraudsters - often pretending to be government officials offering a government grant - then use their victim’s identity to make a bogus claim for Universal Credit and an online request for an Advance Payment. The fraudsters then keep or demand a substantial amount of the Advance for themselves.
The victim often only becomes aware of what has really happened when their legacy benefits stop and they find they are now a Universal Credit claimant with a large Advance to repay which they did not receive.
An estimated 42,000 people may have fallen victim to the scam - and 1 in 10 Advance Payment are bogus - as reported by the BBC: click here.
So what should those affected do?
They need to report the incident to both the DWP and the Police. There is a special Action Fraid hotline 0300 123 2040. DWP have tweeted a video warning people about the scam, including a short video giving this number. Twitter feed here.
They need to explain the circumstances of the fraud, and whether they received any of the Advance Payment themselves, and they need to get advice about whether they are now worse off on UC.
They should only be asked to pay back what they actually received of the Advance Payment, and may be able to request a return to the legacy benefit system.
Repaying the Advance
Answering a parliamentary question on 10th July Justin Tomlinson, DWP Minister, stated that innocent victims would not have to repay the Advance: this was later clarified by a DWP spokeswoman:
‘If someone’s details are fraudulently used to claim an advance but they do not themselves receive this payment, we will not recover the money from the claimant, (but) if the individual receives some of the advance, we will ... seek to recover this amount from them and will pursue the fraudster for any remaining payment.’
Click here for the report on the BBC website
This should mean that Advances paid direct into a fraudster’s bank account will not need to be repaid by the claimant but where the claimant gave their own bank account details to the scammer, then paid them in cash, this leaves open the question of proving that the victim did not benefit from the Advance.
Getting back on legacy benefits
Justin Tomlinson also said that they “ would consider putting them (ie fraud victims) back on to the legacy benefits if they were better off under those.”
Click here for this statement on Hansard
We await something more concrete than Justin Tomlinson’s statement.
But if someone was scammed and was not aware that a claim for UC was being made in their name, then if they can demonstrate that they have been completely scammed and had no knowledge whatsoever that the ‘loan’ or ‘grant’ was in any way connected with a UC claim, then the DWP should - we believe -allow them back onto the legacy benefit system (particularly where they are vulnerable and are now worse off on UC compared with their legacy benefits).
This is because under Section 1 of the Social Security Administration Act 1992 there is no entitlement to a benefit without a claim. Where the ‘claim’ for UC was made without the knowledge or authority of the claimant we believe you can argue that it cannot be a valid claim. This means that there was no legal foundation for stopping the 'claimant's' legacy benefits, and they should therefore be restored.
What are the DWP doing to stop the fraudsters?
Justin Tomlinson has confirmed that a team of about 120 Department for Work and Pensions staff were working to spot and investigate fraudulent claims.
The National Association of Welfare Rights Advisers has written to Amber Rudd to request that the facility to apply online for Advances be removed and for victims of the scam not to be pursued for the debt.
In answer to questions in the House of Commons on 24th July 2019 Amber Rudd also said " ...we are looking at: whether we should move (applications for Advances) to face to face. In November this year, there will be access to the list of births and deaths. We hope we will be able to check who people are more effectively before the advance is made."