Update: 29th April 2020: The current coronavirus situation has seen a spike in the area of attempted investment scams - so we’ve updated our original article to let you know about the latest things to look out for and how you can protect yourself.

Scammers are always on the lookout for new ways to con unsuspecting people out of their money and they adapt very well (and fast) to current events. In this blog, we hope to inform you of current trends seen in the financial sector, and provide you with information required to help ensure your money is safe. Our focus here is on investment scams.

What is an investment scam?

Investment scams are how fraudsters try and convince people to part with their money through the offer of above-average levels of return, at what appears to be minimal risk. It’s easy to understand how these schemes can hook us in. Who wouldn’t want to double or triple their initial investment within three months? But like most things, if it sounds too good to be true – it probably is.

In some instances, a fraudster will deceive people by making them believe in an investment that simply doesn’t exist at all. In other cases, scammers will impersonate a genuine investment company, leading you to believe that you are in contact with a trusted institution. Unfortunately, the reality in both scenarios is that your money is going straight into the scammers’ pockets. The fallout for scams like these can be devastating for those involved, with some people losing life-changing sums of money to these scams.

How can you spot an investment scam?

Here are some tips:

  • How have you been approached? Did someone stand at your front door, send you a surprising email or call you unexpectedly? Or perhaps someone contacted you out the blue via social media? Unsolicited approaches should always ring alarm bells.
  • Are they pressuring you into making a decision? A legitimate company should never force you into making an immediate decision or make you feel uncomfortable.
  • Are you being promised low risk & high return? Does this sound unrealistic, or, too good to be true? Can you contact the company involved, or are you communicating via a generic email address or mobile phone number? This may indicate it’s not a legitimate company.
  • Check the FCA register of regulated companies to ensure the company you are dealing with is regulated. Always access the register via the FCA website directly, and not via any links provided by the company you are dealing with.
  • Are you corresponding with the company you thought you were? Fraudsters are known to impersonate regulated institutions and spoof phone numbers/email addresses, making it appear as though they are contacting you from a trusted source. The FCA register normally has the website and contact details for any institutions registered, so you can always call the company back on a number found via this site to verify if the contact was genuine.
  • Have you been approached regarding access to your Pension? Scammers sometimes target pensions, be careful.
  • If you think you’ve been a victim of a scam, you should contact Action Fraud and your bank.

Most financial products and services can only be offered within the UK if the company is authorised, registered or approved to do so. The FCA also has a Warning List of firms you’ll wish to avoid.

Scammers will target anyone, no matter their age or experience. If you’ve been approached about an investment, check out the useful ScamSmart tool on the FCA website.

Trends since the coronavirus pandemic

Social media platforms such as Instagram, Twitter and Snapchat are being used increasingly to advertise “high returns on low risk investment” opportunities with a noted spike in numbers since the coronavirus crisis began. Some of the most common investment types advertised on social media include foreign exchange (AKA Forex), cryptocurrencies and binary options. More often than not, the investment doesn’t exist at all. In fact the social media page used to sell the investment can be one of many used by a scammer using fake reviews and pictures of luxury items, such as designer goods or flashy cars to hook you in. Always do some research on who you are making an investment with to make sure you are not lining someone else's pockets at your own expense and make sure you check the FCA register. Just because they tell you they are legitimate, it doesn’t mean they are!

If you’re just keen to test your knowledge or learn more on this topic, try the FCA’s Scam or Smart test. Or visit our friends over at @Take5 who have some more information on what you can do to avoid scams.

Remember, if something sounds too good to be true, it’s probably a scam. If it sounds at all unusual or strange to you, always stop and think it over very carefully.

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