Investment scams warning as more than £197m of losses reported in 2018

Victims of investment scams reported losing more than £197 million in total in 2018, figures from Action Fraud show.

People may need to be particularly vigilant during the first quarter of the year, the peak investment season, as many look to invest before the tax year ends in April.

The average loss last year was over £29,000, as fraudsters use increasingly sophisticated tactics to persuade victims to invest by using fake credentials and contacting people through websites made to appear legitimate and social media.

People should reject unsolicited investment offers, check whether a firm is authorised before investing by using tools from the Financial Conduct Authority (FCA) and also get impartial advice first, those combating scams said.

The FCA said call centre information shows the most commonly reported scams involved investments in shares and bonds, the buying and selling of currencies and crypto-currencies by firms that are not authorised by it.

It said fraudsters’ tactics are changing, with people increasingly being targeted online, moving away from the traditional cold call scam.

Fraudsters are now contacting people through emails, professional-looking websites and social media channels, such as Facebook and Instagram, it said.

Last year, 54% of those who checked the FCA’s “warning list” had been contacted by potential fraudsters via online sources, up from 45% in 2017.

The FCA warning list is a tool that helps users to find out more about the risks associated with an investment, and search a list of firms the FCA knows are operating without its authorisation.

Mark Steward, executive director of enforcement and market oversight, FCA, said: “The first quarter of the year is a common time for people to make their financial plans for the year, including investments.

“But before you invest, do your homework.

“Always check the FCA’s register to make sure you’re dealing with an authorised firm and use the contact details on our register, not the details the firm gives you, to avoid ‘clones’.

“Also check the FCA warning list of firms to avoid. Remember, if in any doubt – don’t invest.”

The FCA is urging people to look out for six warning signs:

1. Unexpected contact. Traditionally scammers cold call but contact can also come from online sources such as email or a social media, post, word of mouth or even in person at a seminar or exhibition.

2. Time pressure. They might offer you a bonus or discount if you invest before a set date or say the opportunity is only available for a short period.

3. They may share fake reviews and claim other clients have invested or want in on the deal.

4. Fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere.

5. They may use convincing literature and websites, claiming to be regulated, speaking with authority on investment products.

6. They may use flattery to lull their targets into a false sense of security.

Alvin Hall, a personal finance expert – who is supporting the campaign, said: “If my 30 years of experience in investment markets has taught me anything, it’s this – regardless of how confident you are about what you’re investing in, you should also be just as confident you know who you’re investing with.

“The FCA warning list is a fantastic resource for smart investors to use to protect themselves from scams.”

Director of Action Fraud Pauline Smith said: “These statistics show that investment fraud is a major threat, with fraudsters doing everything they can to manipulate potential victims into making investments.

“Victims are often coerced or persuaded into parting with significant amounts of money and this can have a devastating impact on their wellbeing and finances.

“We are working with the FCA to raise awareness of investment fraud and would urge anyone who is considering in investing to check with the FCA before parting with their money.

“If you think you have been a victim of investment fraud, report it to Action Fraud.”

The FCA’s financial services register can be found at register.fca.org.uk/ and its warning list at www.fca.org.uk/scamsmart/warning-list.

The FCA’s ScamSmart campaign encourages those considering investing to check its dedicated website – www.fca.org.uk/scamsmart.

Those who have lost money in a scam can contact Action Fraud -www.actionfraud.police.uk.