09 June 2020

Investment scams: What to watch out for

Criminals are taking advantage of the many uncertainties due to coronavirus and targeting consumers with clever investment scams.

What is an investment scam?

Investment scams are when criminals try to convince people to move their money to a fund that doesn’t exist, or to pay for a fake investment. They'll usually promise a large amount of money back in return, in order to entice someone into making the transfer.

These scams can include investment in items such as gold, property, carbon credits, cryptocurrencies, land banks and wine.

Criminals may pretend to be from a genuine company

Watch out for criminals pretending to be from a genuine company (called a ‘clone firm’). They will use the name, ‘firm registration number’ (FRN) and address of firms and individuals authorised by the Financial Conduct Authority (FCA) to suggest they are genuine. They have also been known to use the names and details of real employees working at the firm to make the scam seem more believable.

How to spot an investment scam

Warning signs that you might have been contacted about an investment scam include:

  • Unexpected contact – Traditionally, scammers cold-call, but contact can also come from online sources such as email or social media, post, word of mouth or even in person at a seminar or exhibition.
  • Time pressure – You might be offered a bonus or discount if you invest before a set date, or you might be told the opportunity is only available for a short period.
  • Social proof – The fraudster may share fake reviews and claim other clients have invested or want access to the deal.
  • Unrealistic returns – Fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere.
  • False authority – They might use convincing literature and websites, claiming to be regulated and speaking with authority on investment products.
  • Flattery – They may try to build a friendship with you to lull you into a false sense of security.

If an investment opportunity sounds too good to be true, it probably is.

How to protect yourself

Don’t be pressured into making a quick investment decision. Here are some tips to avoid falling victim:

  • Check that the firm is authorised by the Financial Conduct Authority (FCA). You can do this by using the register on the FCA’s website.
  • Check that it’s not a ‘cloned company’ as fraudsters can pretend to be a genuine firm. Do this by checking for any other websites under the same name.
  • Make sure you use contact details on the FCA’s register, not the details given to you directly from the company, or by the person who made contact with you.
  • Do your research and always get independent advice. Use the FCA Warning List to check the risks against any potential investment.

The Financial Conduct Authority has created a guide on investment scams and how to protect yourself.

Read the FCA guide to Investment Scams.

If you’re worried you’ve been scammed, contact us right away.

For more information on how to protect yourself from fraud, read our guide to the latest scams.

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