Investment Scams - Avoid falling into a trap

23 September 2021

3 min read

Investing your money can be an exciting and profitable prospect, but if a low risk, high reward opportunity is being advertised think very carefully and do your own research as it is most likely a scam. Fraudsters will often produce high quality, genuine looking materials to encourage you to invest, but can you spot the frauds and the fakes? This article contains details of some common tactics used by scammers, and tips to help you avoid falling into their traps.

Unfortunately, investment scams take many forms; from fake bonds, businesses that don’t exist, and fake cryptocurrency schemes, fraudsters use a range of tricks to tempt you to part with your money. They’ll use professionally presented websites and legitimate-looking social media pages to entice you, as well as issuing high quality professional documents to give the impression of authenticity.

Criminals will try to trick you into investing in a ‘risk-free, once-in-a-lifetime opportunity, guaranteed to soar in value’. Remember that no investment is risk free. If it sounds too good to be true, that’s because it is, and a scammer is on the other end of the investment.

If you think you’ve found a great investment opportunity always seek to validate who it is you’re speaking with. A genuine financial advisor will have no problem proving who they say they are. In addition, seeking independent financial advice is always recommended.

Cryptocurrency is an increasingly popular investment choice, but remember that cryptocurrency isn’t protected by the UK’s Financial Services Compensation Scheme (FSCS) and most aren’t regulated by the Financial Conduct Authority (FCA). Genuine cryptocurrency trading platforms will most likely ask you to verify your ID, so be cautious if you aren’t asked for this. Remember that even if the investment is genuine, cryptocurrency is an extremely high risk investment choice.

Never be afraid to say ‘No!’. Scammers are likely to pressure you into investing in as little time as possible, and want you to rush in without taking the time to think about it and ask more questions.

How can the scam operate?

  • You’re searching for an investment online or see an advert offering an opportunity to make a lot of money, very quickly.
  • The website that you visit looks very professional and you ask for more information. You’ll receive glossy marketing material but will soon be bombarded with phone calls and emails telling you to act soon to avoid missing the opportunity.
  • Enticed by the offer, you invest your savings and wait to see the return on your investment. At first, some criminals will offer you a small return to trick you into investing more, but then all contact stops and your money has gone.

How to protect yourself

  • Remember, there are no get-rich-quick schemes. If it sounds too good to be true, it probably is.
  • Do your research. Many of these fake investment companies will be overseas and won’t be authorised by the Financial Conduct Authority. Criminals can however clone a legitimate firm. Check the FCA’s warning list on their website www.fca.org.uk/scamsmart/warning-list, for up to date information.
  • Legitimate companies won’t pressure you. Don’t be afraid to say ‘no’. Be firm, hang up and don’t respond to any more emails. Never sign up to anything immediately. Always seek independent financial advice.
  • Search for reviews about the company to see if there is any reference to it being a scam.
  • Call the company direct using the telephone details that are held on the FCA website to check that the person you are dealing with actually works for them and that they are genuine.
  • Crypto investments are considered very high risk. It’s important you read the information on the FCA website before making any decisions. Here you can check unregistered cryptoasset businesses that are operating in the UK. Visit www.fca.org.uk/consumers/cryptoassets.

Please note that the links above will open in a new tab when clicked.

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

Not found what you're looking for?

Contact our support team