Financial fraud nets millions for organised crime scammers
Fraudulent get-rich-quick schemes are netting millions for organised crime. But investment scams can be difficult to spot because they’re designed to look like genuine investments, with most scammers having a professional-looking website and documents.
In the first six months of this year, across all categories of financial fraud, a total of £207.5 million was stolen from almost 60,000 people, according to UK Finance, an industry body. Increasingly, they are using sophisticated and effective tactics to get you to part with your money. Even though some investment scams may look like a real deal, there are some red flags you can spot to help you steer clear of them.
The scammer’s offer will sound legitimate
You may receive a telephone call or email from a scammer claiming to be a stockbroker or portfolio manager and offering you financial or investment advice. They may claim what they are offering is low-risk and will provide you with quick and high returns, or encourage you to invest in overseas companies. The scammer’s offer will sound legitimate, and they may have resources to back up their claims. They will be persistent and may keep calling you back.
Some investment scams may even claim to be regulated by the relevant authorities to mislead you. In the UK, a firm must be authorised and regulated by the Financial Conduct Authority (FCA) to perform most financial services activities. A growing number of scams, often promoted on social media websites, involve foreign exchange trading and cryptocurrencies.
According to the FCA, the number of scams involving these two more than tripled in 2018/19, meaning they should be treated with particular caution. Many scams will try to use social proofing, using fake online reviews or fraudulent adverts to look credible.
How to protect yourself
The FCA has recommended four simple steps to help protect yourself from investment-related scams:
Reject unexpected offers – if you receive a call or email concerning an investment opportunity out of the blue, there is a very high chance that it is a scam. The best thing to do is to hang up the phone or ignore this kind of correspondence
Check who you are dealing with – literature and websites may appear authoritative, but don’t assume it’s real. You can easily verify a firm’s identity on the Financial Services Register. Use the contact details on the Register, not the details given to you, to avoid ‘clones’ of companies you trust
Don’t be rushed – common strategies employed by fraudsters include pressure to invest before a false deadline or on special terms. Sales tactics like this should always ring alarm bells. Any investment company you would want to deal with won’t pressure you into making important financial decisions
Seek impartial information or advice – rather than take advice from an outfit that has approached you unexpectedly, consider seeking professional financial advice to plan your investment decisions. While you will be charged a fee for this service, it could end up being money well spent
Remember the old adage: if the opportunity sounds too good to be true, it probably is.