Investment scams - avoid falling into a trap

What is an investment scam?

Unfortunately, fraudsters use a range of tricks to tempt you to part with your money for a fake investment opportunity. They produce high quality, genuine looking materials to give the impression they’re authentic and trustworthy, including:

• Online adverts
• Professionally-presented websites
• Legitimate-looking social media pages
• High-quality professional documents.

They’ll even go as far as to ask you to provide proof of identity documentation in order to look legitimate.

Criminals make big claims about the investments, like that they’re:

• Risk-free
• A once-in-a-lifetime opportunity
• Guaranteed to soar in value.

How does an investment scam work?

Here’s an example of how a typical scam might unfold:

1. You find an investment opportunity online, offering the possibility to make a lot of money, very quickly.
2. The investment scheme’s website looks very professional and you fill in a contact form to request more information.
3. You receive sleek marketing material, and then you’re bombarded with phone calls and emails telling you to act fast to avoid missing out.
4. Enticed by the offer, you invest your savings and wait to see the return on your investment – some criminals will send you small amounts of money back initially, to give the impression of a small return, and to tempt you into then investing even more.
5. All contact stops and your money has gone.

You can learn more by reading two real examples of investment scams.

How can I protect myself?

The Financial Conduct Authority (FCA) provides guidance and information to help you understand investments, and to warn you about known fake and scam companies.

Here are some top tips to keep in mind to keep you safe when considering an investment opportunity.

Check who you’re speaking to is genuine, and get financial advice

It’s always recommended to get independent financial advice before making any investment decisions. And remember:

• Always confirm the identity of anyone you speak with – anyone genuine will have no problem proving who they say they are
• Always call any company you have contact with directly, using the telephone details held for them on the FCA website, to make sure that the person you’re dealing with actually works for them and that they’re genuine.

Do your research carefully

To check whether an investment opportunity is genuine, you should:

• Search for reviews about the company to see if there’s any reference to it being a scam
• Be cautious of companies based overseas – many fake investment companies are, and they won’t be regulated by the FCA
• Check that the firm is registered as a UK company and check for directors’ names on Companies House
• Check that the person or company you are dealing are on the FCA register
• Watch out for ‘clone’ companies – criminals can set up a fake company which has a very similar name and details to a legitimate one, to trick you into mistaking their fake company for the legitimate one. Check the FCA’s investment warning list.

Stay alert and be wary of big promises

Sadly, there are no get-rich-quick schemes. If it sounds too good to be true, it probably is.

Many of us have heard of investment scams before, so fraudsters constantly update their tactics and have convincing lies about how:

• This opportunity is different
• The opportunity is guaranteed to make a lot of money
• You’ll be ‘ahead of the curve’
• You’ll be smarter than others, who don’t see what a valuable opportunity this is.

Always take your time, ask questions and think twice. If you suspect something’s not right:

• Never be afraid to say no – scammers may try to pressure you, but legitimate companies won’t, so never sign up to anything immediately
• Be firm, hang up and don’t respond to any more calls or messages.

Is it safe to invest in cryptocurrency?

Cryptocurrency has been in the news a lot recently, and it’s an increasingly popular investment choice. However, many people are being increasingly targeted by crypto related investment scams.

Criminals create and post fake adverts online and on social media – often using the images of celebrities or well-known individuals to make you believe they’re genuine.

A bogus trader will often:

• Offer to help you by opening a digital wallet account, for managing your investment
• Provide fake or distorted information about stock prices and investment returns
• Suddenly close the online account, take your money, and refuse to return it or ask you for more money before they return it.

Remember:

• Most firms advertising and selling investments in cryptocurrencies are not authorised by the FCA
• If you see an opportunity advertised by a well-known celebrity, this doesn’t mean that the investment is genuine
• Stay in control of your trading accounts and wallets and avoid letting a ‘trader’ set up or control your account
• Don’t share your card details, and don’t download software on to your device that allows someone to access it remotely
• Crypto investments are considered very high risk – before making any decisions, it’s important you read the FCA’s guidance and check unregistered cryptoasset businesses that are operating in the UK.

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Find out more about common fraud threats and how to avoid them.