Investment scams are where fraudsters contact you out of the blue with an investment opportunity, claiming to offer high returns on your money for very little risk, which often appear too good to be true.
How it happens
Fraudsters will try and convince you to make an investment, often using false testimonials, fake celebrity endorsements, spoof websites or phone calls, cloned companies, and other marketing materials to make the scam appear genuine. They may have set up a fake business with a similar name to a genuine investment company, often creating fake websites and social media adverts to make their scam appear more genuine.
Types of investment scams:
- Fictitious investments that don’t exist.
- A genuine investment opportunity but the fraudster doesn’t place the funds in the investments.
- A fraudster pretending to be a representative of a genuine investment company.
Common investment scams
Business shares – Fraudsters may try and convince you to invest in shares of companies on the stock exchange. They suggest that market conditions are currently favourable to invest, and they can offer you some insider information which can give you high returns. These are some signs that the investment is too good to be true and the fraudster is trying to build up trust with you.
Property development – Fraudsters may offer you the opportunity to purchase a piece of land and build your dream home for a relatively affordable price, under the premise that once the planning permission is granted, the land will be a lot more valuable. This is likely to be a Ponzi scheme – a ‘get rich quick’ scam which pays returns to investors from their own money, or from money paid in by future investors, with no actual investment, as the fraudster looks to takes the money for themselves. The land which they’re offering has very little to no chance of having the planning permission granted.
Property development scams may also occur in property purchases or development abroad. If you don’t have a solicitor acting on your behalf, you could be at further risk. You may be asked to pay the majority of the value of the property or building costs upfront and because of the different laws around the world, you may never get to see the property and lose the funds you’ve invested.
Pension investments fraud - Scammers will contact you out of the blue by phone, email, text messages or through social media. They may post adverts online of attractive offers to persuade you to transfer your pension funds over to them or to release funds from it. They may also try and convince you to invest in an opportunity with high returns, or in some cases, fraudsters may try and directly steal your pension funds. The fraudster may achieve this by offering you a free pension review, and then suggesting that they’re able to offer higher pension returns than what are currently being offered on your current pensions or savings.
Fraudsters may also pretend to be from a Financial Conduct Authority (FCA) registered company. They may suggest that they’re able to release cash from your pension funds, even if you’re under the minimum age for funds to be released, offering you a limited time offer if you withdraw your funds early.
They may also try and convince you to take unusual investments such as property investments and holiday homes such as time share investments, which are unregulated and high risk. Some investments may be hard to sell or contracts can be difficult to terminate once you’ve signed up.
Crypto currency investments – Cryptocurrency is a digital asset that you can trade or exchange online, however, the cryptocurrency market is unregulated and volatile, with values of currencies regularly fluctuating. It has grown in popularity in recent years, with some investors seeing high returns.
Fraudsters will cold call their victims and use social media platforms to advertise ‘get rich quick’ investments in mining and trading of cryptocurrencies. They’ll convince their victims to sign up to a website with their personal information, such as credit card details and driving licenses to open a trading account, make a minimum deposit, then use that to make an investment to make profit. Fraudsters will then try and get their victim to share the log on details to their crypto wallet, so they can help them manage their account, but in reality, they will take control of the wallet and steal the investment.
Ways to spot an investment scam:
- It seems too good to be true – high returns for a low risk.
- False testimonials and fake celebrity endorsements, promoting lavish lifestyles on social media.
- You feel pressured into making a quick decision, for example if the caller states the offer is ‘only available right now’ or ‘don’t miss out’. Legitimate organisations will never pressure you into investing on the spot.
- You’re approached out of the blue by phone, email, text message or by someone calling at your house with an investment opportunity.
- The ‘company’ contacting you won’t allow you to call back.
- You may have been told that the offer is only for you and to keep the opportunity to yourself.
- The only contact details you’re given is a mobile phone number or a PO box address.
- The company want to take control of your accounts or investments, especially when cryptocurrency is being used.
How to protect yourself
Follow the advice below to help protect yourself and your business from Investment Scams:
- Conduct your own research and understand the offer and how investments and trading works.
- Carry out research on the investment and the company, do not rely on word-of-mouth referrals, others personal experiences or celebrity testimonials. Take your time to understand the offer.
- Visit the FCA website to check if the company or individual is genuine and regulated on the official registered list of companies. Check that the company or individual is authorised to undertake the activities they offer. There's also a list of reported investment scams and cloned companies to check if you’re dealing with a known scam.
- If the investment company isn't FCA regulated, you may not be covered under Financial Ombudsman (FOS). If the company is operating outside of the UK, contact the country’s FCA equivalent.
- Check email addresses and website domains very carefully for subtle differences such as added letters, numbers, special characters, or a different domain like .com instead of co.uk.
- Use different communication channels – don’t rely on contact on social media, always verify over the phone on a genuine number for the contact or one from the company’s official website.
- Get a second opinion; speak to trusted friends or family members or seek professional independent advice before conducting any investment.
- Make sure any cryptocurrency investment is held in your name and you have full access to the account/wallet.
- Research independent online reviews about the company/investment to check for consumers’ recent experiences, don’t trust those on the website, as they could be fake.
- Don’t trust something which seems too good to be true – high returns for a low risk rarely ever occurs.
- Never rely on any celebrity endorsements – these are often fake.
- Don’t feel pressured into making a quick decision, for example if the caller states the offer is ‘only available right now’ or ‘don’t miss out’. Legitimate organisations will never pressure you into investing on the spot.
- Query out of the blue contact via phone, email, text message or by someone calling at your house or business premises with an investment opportunity.
- Don’t take it for granted that someone you know have conducted thorough checks when recommending an investment opportunity, always do your own research.
How to report it
If you believe you have been a victim of this scam, please report it to us or your bank.
You should also report it to Action Fraud on 0300 123 2040 or via the Action Fraud website. If you are in Scotland, please report to Police Scotland directly by calling 101.