Yahoo Finance Watchdog warns of investment scams after Brits lost £200m in 2018
Scammers pretending to sell legitimate investments stole a total of almost £200m ($260m) from unsuspecting Brits in 2018, according to Action Fraud.
The national fraud and cyber-crime reporting centre found Brits lost an average of £29,000 each to investment scams last year.
Now the Financial Conduct Authority (FCA) is warning the public to be vigilant as fraudsters are employing “increasingly sophisticated tactics to persuade victims to invest.”
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Data from the financial regulator’s call centre shows the most commonly reported scams last year involved investments in shares and bonds, forex, and cryptocurrencies by firms not authorised by the FCA.
Together, they accounted for 85% of all suspected investment scams reported in 2018.
The FCA is warning people 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.
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“These statistics show that investment fraud is a major threat, with fraudsters doing everything they can to manipulate potential victims into making investments,” Action Fraud director Pauline Smith said.
“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,” Smith said.
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“If you think you have been a victim of investment fraud, report it to Action Fraud.”
The profile of investment scams is changing as fraudsters move away from the traditional cold call, according to the FCA. Many scams now target people online through emails and social media channels, such as Facebook and Instagram.
Over half (54%) of those who checked the FCA Warning List in 2018 have been contacted by potential scammers via the internet. This is up from 45% in 2017.
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The FCA Warning List is a tool that helps users find out more about the risks associated with an investment. Users can search a list of firms the FCA knows are operating without its authorisation.
Personal finance expert Alvin Hall is working alongside the FCA to educate the public on the most common tactics used by investment scammers.
“The amount lost last year to investment fraud is staggering, over £197 million according to Action Fraud,” Hall said.
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“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.”
The FCA is urging people to be careful when making investment decisions, and to look out for these six warning signs:
Unexpected contact. Traditionally scammers cold-call, but contact can also come from online sources, such as email or social media, post, word of mouth, or even in person at a seminar or exhibition.
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.
Social proof. They may share fake reviews and claim other clients have invested or want in on the deal.
Unrealistic returns. Fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere.
False authority. Using convincing literature and websites, claiming to be regulated, speaking with authority on investment products.
Flattery. Building a friendship with you to lull you into a false sense of security.
