Scamwatch: online investment fraud

Scamwatch: beware online investment fraud

Stay one step ahead of the fraudsters with our series of articles giving you the lowdown on the scams they use to trick people out of their hard-earned cash - and how to avoid being taken in by them.

This week, we issue a warning about the fraudulent "binary options" online trading websites tricking people into investing their life savings.

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How does it work?

"Binary options" investment websites allow users to bet on whether shares or currencies will rise or fall in value - often offering impressive returns to those who get it right.

They are binary because there are only two possible outcomes: win or lose. This can make them seem a simple way to make money.

Investing this way is high risk, though. And even legitimate "binary options" sites are unregulated.

Fraudulent versions of the sites, set up with the sole aim of stealing investors' money, are also rife.

They generally lure people in with promises of huge returns, claiming that there is little risk involved.

Once someone starts to invest, they then encourage them to invest more and more, often saying they cannot withdraw their winnings unless they invest a certain amount.

They then go silent - leaving many investors tens of thousands of pounds out of pocket.

How can I avoid being caught out?

The basic rule of thumb is that if it seems too good to be true, it probably is. So be wary of any investment offering high returns with supposedly little or no risk.

Alarm bells should also ring if you invest in any sort of scheme with which you are then pressured to invest more and more.

Hard-sell tactics, such as claiming that you will miss out if you do not invest immediately, are often a sign you are being duped.

I've been defrauded. What should I do?

Break off all contact with the fraudsters (or "brokers") behind the scheme, and report the scam to Action Fraud (0300 123 2040).

Then alert your bank to protect your accounts and, is possible, stop any payments yet to be made.

It is also worth holding on to any written communications you receive from a fraudulent trading website to share with the relevant authorities.

However, as most sites of this kind are unregulated, and many are based overseas, the chances of you receiving compensation from a UK scheme are slim.

Victims of scams and fraud
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Victims of scams and fraud
Susan Tollefsen, Britain's oldest first time mother, was scammed out of £160,000 by a fraudster she met on an online dating site. A man claiming to be an Italian gold and diamond dealer told her he was in the middle of a land deal but couldn't access cash. Tollefsen felt sorry for him and started wiring him money, eventually selling her jewellery, her flat and borrowing £32,000 from friends to give him. Read the full story here.
In March 2015 an American woman who was only identified as 'Sarah' went on the popular US television programme the Dr Phil Show to reveal she had sent $1.4 million to a man that she had never met. Although she was certain she wasn't being scammed, her cousin made her go on the programme because she was convinced it was a scam. Find out more about the story here.
Maggie Surridge employed Lee Slocombe to lay a £350 deck in her garden in March 2015. However Slocombe used a combination of lies to scam Surridge out of thousands of pounds. He told Surridge that the front and back walls were dangerous and needed rebuilding and also conned her into building a porch, all for the cost of £8,500. Read the full story here.
It's not just individuals who can be the victims of scams, big corporations can also fall foul of these fraudulent practices. In 2015 Claire Dunleavy repeatedly used a 7p 'reduced' sticker to get significant amounts of money off her shopping at an Asda store in Burslem, ending up with her paying just £15.66 for a shop that should have cost £69.02. Read the full story here.
Sylvia Kneller, 76, was conned out of £200,000 over the space of 56 years thanks to scam mail. The pensioner became addicted to responding to the fraudsters, convinced that she would one day win a fortune. Ms Kneller would receive letters claiming she had won large sums of money but she needed to send processing fees to claim her prize. Learn about the full story here
Leslie Jubb, 103, became Britain's oldest scam victim in August last year when he was conned out of £60,000 after being sent an endless stream of catalogues promising prizes in return for purchasing overpriced goods. The extent of this con was discovered when Mr Jubb temporarily moved into a care home and his family discovered what he had lost. Find out more about this story here
Stephen Cox won more than £100,000 on the National Lottery in 2003 but has been left with nothing after falling victim to two conmen. The 63-year-old was pressured into handing over £60,000 to the men who told him his roof needed fixing. They walked him into banks and building societies persuading him to part with £80,000 of cash while doing no work in return. See the full story here
Last year the Metropolitan Police released CCTV footage of a woman who had £250 stolen at a cash machine in Dagenham. The scam involved two men distracting the woman at the machine, pressing the button for £250 then taking the money and running away. Read about the full story here.
Rebecca Ferguson shot to fame as a runner up on the X-Factor in 2010 but fell victim to a scam artist last year when someone she had believed to be a friend conned her out of £43,000. Rachel Taylor befriended the singer in 2012 and claimed to be a qualified accountant, so Ferguson allowed her to look after her finances. Instead of doing this Taylor stole £43,000 from the Liverpudlian singer. Read more here
When Rebecca Lewis discovered her fiance had started a relationship with a woman he met online she packed her bags to leave. But that didn't stop her checking out the mystery woman, Rebecca quickly realised Paul Rusher's new love was actually part of a romance scam. She told Paul just before he sent the scammers £2,000 which was supposed to bring his new girlfriend to England. Find the full story here.

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