People are being warned about “get rich quick” scams involving bogus online investments, as those who are conned lose more than £14,600 on average.
Fraudsters promise high returns from investments in cryptocurrencies and forex (foreign exchange where one currency is converted into another), according to Action Fraud and the Financial Conduct Authority (FCA).
Victims lost more than £27 million in total in 2018-19.
Reports of cryptoassets and forex investment scams more than tripled last year, compared with the year before, to more than 1,800, from 530 in 2017-18.
The scams work by criminals promoting get-rich-quick online trading platforms through social media.
Posts often use fake celebrity endorsements and images of luxury items like expensive watches and cars.
These then link to professional-looking websites where consumers are persuaded to invest.
Investors will often be led to believe that their first investment has successfully made a profit.
The fraudster will then contact the victim to entice them to invest more money or introduce friends and family with the false promise of greater profits.
But the returns stop, the customer account is closed and the scammer disappears with no further contact.
Action Fraud reports show that, on average, victims were each scammed out of £14,600 through forex and crypto scams in 2018-19.
The FCA is running advertising on social media to raise awareness of the trading scams and encourage consumers to be more sceptical about them, as part of its ScamSmart campaign.
Supported by the City of London Police, the FCA’s ScamSmart campaign encourages those considering an investment to check its dedicated website for tips on how to avoid investment fraud at www.fca.org.uk/scamsmart.
Director of Action Fraud Pauline Smith said: “These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms.
“It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.
“Action Fraud is pleased to be partnering with the FCA to raise awareness of online trading scams, and we hope it will help prevent more people falling victim.
“Remember, if you think you have been a victim, contact Action Fraud.”
Mark Steward, executive director of enforcement and market oversight, FCA, said: “We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms.
“Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal.
“Before investing online find out how to protect yourself from scams by visiting the ScamSmart website, and if in any doubt – don’t invest.”
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, said the only people to get rich quick from cryptoassets scams flooding the internet are the scammers themselves.
She said: “If a company approaches you out of the blue, through social media or on the phone, it pays to start with scepticism – even if a trusted face seems to be fronting it.
“The simplest way to stay safe is to bear in mind that if anyone is offering incredible overnight returns without risk, it’s a scam.”
Laura Suter, personal finance analyst at AJ Bell, said cryptocurrency fraud is a “scammers’ paradise”.
She said: “The scale of the losses are massive, with the average victim losing £14,600, and in many cases those victims will also have persuaded friends and family to invest too.
“Anyone handing over their hard-earned cash should make sure they understand what they’re getting into, they’ve checked it’s a legitimate investment, and not rely on hype and excitement from friends or social media.
“Investing isn’t a get-rich-quick scheme – and anything that uses fomo (fear of missing out) or requires you to invest before thinking is best to be avoided.”
Here are some tips from those behind the campaign for staying safe:
1. Do not assume it is real.
Professional-looking websites, adverts or social media posts do not always mean that an investment opportunity is genuine. Criminals can use the names of well-known brands or people to make their scams appear legitimate.
2. Stay in control.
Avoid uninvited investment offers whether made on social media or over the phone. If you are thinking about making an investment, thoroughly research the company first and consider getting independent advice.
3. Make the right checks.
Firms providing regulated financial services must be authorised by the FCA. You can check whether they are authorised on the FCA’s register. Use the contact details on the register, not the details the firm gives you, to avoid “clones”.
4. If you have been a victim of fraud or cyber crime, report it to Action Fraud.