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Research and ‘gut instincts’ helping investors to thwart scammers, survey finds

Around a third (32%) of investors who have managed to avoid a scam said “gut instinct” helped them to distinguish between genuine and bogus opportunities, a survey has found.

Finding mistakes in material (34%) and requests for personal details to secure the opportunity (34%) were also common warning signs that helped people to avoid being defrauded.

The Financial Conduct Authority (FCA) commissioned research by Censuswide among more than 1,000 people across the UK who have held investments, and have also avoided a suspected scam.

The FCA’s latest ScamSmart campaign aims to spotlight the skills used by those who have stopped scammers in their tracks, to help protect other investors.

The FCA is also urging investors to check the warning list on its website before making any investment decisions. This will help identify those who are not authorised to operate, or flag to investors where additional research is needed.

If investors were to deal with an unauthorised firm, they will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.

In 2022, more than £2 million was estimated to have been saved by investors, who called on the FCA to report the firm or individual before losing money.

Other warning signs that made investors suspicious included being contacted out of the blue (33%) and being pressured to invest before an “offer” ended (26%).

Warning signs of a scam could include being contacted unexpectedly, being put under pressure to sign up quickly, being told to keep the investment a secret and being offered unrealistic returns.

Scammers may pretend to be helping and ask people to download software or an app so they can access their device. This could enable scammers to access their bank account or make payments using their card.

Of those surveyed who had avoided investment scams, a third (33%) came across the opportunity via email, while a quarter (25%) received a phone call.

Once investors realised the opportunity was fraudulent, 42% warned family and friends, while a further 27% posted comments on social media to warn others.

Mark Steward, executive director of enforcement and market oversight at the FCA said: “Scammers are becoming more and more sophisticated, coming up with different tactics, such as impersonation texts or calls, and using the cost-of-living pressure as a way to tempt investors into false opportunities.

“Once money has been lost in this way, it’s difficult to get back, so if something seems too good to be true, it probably is.

“It’s great to see so many investors being able to spot the signs of a scam, and helping others to do the same You don’t need to be a Sherlock Holmes to spot scams.

“Our Scamsmart advice and tips together with the FCA’s warning list provides all the clues you need to sort the genuine investments from the fraudulent ones.”