Many people do not know how to spot investment scams, survey finds

More than two-fifths (44%) of people would consider turning to investments in the hope of bigger returns, a survey has found.

But a fifth (20%) do not know where to get information and advice to help them with investing and nearly a quarter (22%) do not know how to check whether or not an investment company is genuine, Nationwide Building Society said.

One in five (19%) people believe an online advert is sufficient to prove a firm is genuine.

This is despite recent concerns and warnings raised about fraudsters advertising online.

Nationwide’s own data shows the number of investment scams reported by members in 2020 increased by 79% compared with 2019, as fraudsters are convincing people to “invest”.

Its survey also found 19% of people would invest with someone contacting them via email after registering interest on a website.

And 7% would invest with a company which contacted them out of the blue, which could also be a warning sign of a scam.

Ed Fisher, Nationwide’s head of fraud policy, said: “One of the unfortunate side effects of the pandemic has been a rise in investment scams.

“Criminals try to take advantage of any uncertainties and a low interest environment to target people with increasingly sophisticated tactics.

“And they are bold too – they even target victims again with ‘recovery scams’ by promising to get their money back for an upfront fee.

“It’s crucial to undertake proper research and due diligence before handing over your money.

“Being especially cautious is the best defence, even if you are proactively looking for an investment and you find what appears to be a legitimate company, you still need to confirm the site is genuine and you are dealing with someone who works there.

“And take care to question where the money is going. We will always warn you if an account name and number don’t match, so if someone tells you to send it to a name that’s different to the exact trading name of the firm, it could well be a scam.

“Always check the FCA (Financial Conduct Authority) Register and the FCA Warning List as it has listings of legitimate firms’ details, and firms that are known to be impersonated.”

In more positive findings in Nationwide’s survey, just over half (51%) of people would check the FCA Register to check the company is authorised to offer investments, and 40% would speak to their bank or building society, while just over a third (34%) would speak to an independent financial adviser for information about investing.

Nationwide said scams have become more sophisticated.

Its own data suggests payments made to “cloned” companies posing as legitimate brands have become more commonplace.

This tactic involves criminals copying contact details, websites and employee names of well-known firms.

People buying cryptocurrencies are also being tricked into trusting a “broker”, and having money siphoned out of an account that has been set up for them, Nationwide said.

The society’s survey found the most common feelings after being scammed are anger, upset and embarrassment.

Over-55s were more likely to feel angry, while millennials aged 25 to 34 were more likely to feel embarrassed.

Some 2,000 people were surveyed across the UK in February.

Here are Nationwide’s tips to spot an investment scam:

– Unexpected contact

Scammers often cold call, but contact can also happen after you have looked for an opportunity yourself, such as filling in a form following an online search or responding to a social media post.

– Pressure

You might be offered a bonus or discount if you invest before a set date, or told an opportunity is only available for a short period. Reputable firms do not put their clients under intense pressure.

– Social media ‘proof’

Fraudsters may share fake reviews and claim other clients, including celebrities, have invested or want access to the deal.

– Unrealistic returns or easy money

Fraudsters often promise returns that sound too good to be true, or an app that does all the work for you.

– False authority

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

– Flattery

Criminals may try to build a rapport to lull you into a false sense of security.

To avoid scams, Nationwide recommends checking firms out using the FCA website, using its Register and Warning List of firms, and getting independent advice.

It said people should check payment details thoroughly and not be fooled by stories about why a payment needs to go to a slightly different account name than the company name.

Nationwide has further information on scams at https://www.nationwide.co.uk/products/other/landing-page/fight-fraud