Fraud Alert! Warning Investment Scams Increasing, How To Protect Yourself

Action Fraud figures show that victims of investment fraud lost at least ￡657m in 2020, as scammers preyed on financial vulnerability caused by the coronavirus pandemic.   

There are different types of investment fraud, the most common involve shares, bonds, cryptocurrency and commodities such as wine, fine art and diamonds. Fraudsters contact you unexpectedly, promise generous returns and may say that the opportunity is time limited. They downplay the risks to your money. They call you repeatedly and keep you on the phone a long time in order to build your trust, stop you speaking to other people or having time to think about the offer.

The second stage of these frauds is known as a Recovery Fraud where victim details are passed onto other fraudsters who try to take yet more money. They say that they have been appointed to help and ask for a refundable upfront fee. They often use the details of cloned companies ie genuine companies whose details have been hijacked, in order to reassure investors. Reports of ‘clone firm’ investment scams increased by 29% in April 2020 compared to March, when the UK went into its first lockdown.

How to avoid investment scams

Reject cold calls. If you’re called about an investment opportunity, the safest thing to do is just hang up.

Check an investment opportunity using the Financial Conduct Authority (FCA) Warning List online tool.

Check that the investment company is on the FCA Financial Services Register.

Don’t feel pressurised or rushed into making a decision. Always seek advice before investing, ideally from an Independent Financial Adviser who is authorised by the FCA.

If you’re not sure whether a scheme or investment offer is a scam, contact the Citizens Advice consumer helpline on 0808 250 5050 for advice. Report a fraud to Action Fraud on 0300 123 2040.

A increase in cyber-fraud across the world means that we all need to learn how to spot and avoid different types of fraud and cybercrime.  

An emerging tactic used by fraudsters is the ‘spoofing’ (cloning) of telephone numbers. A decade ago, anyone receiving a suspicious call could look up the number that was calling them to check its legitimacy. No longer is this sufficient advice.

Fraudsters can now clone numbers used by legitimate organisations, your local bank, HMRC, or even local police station, to make it look like that organisation’s genuine number is calling you. The fraudster claims to be from that organisation and tries to convince you to do what they say.  This means you cannot rely on your Caller ID display to tell you who is calling you.

Protect yourself:

Beware unexpected phone callers, whoever they claim to be. If in doubt, never divulge personal details over the phone to someone who has called you. The more you say to a fraudster the more information they have. Don’t be afraid to hang up. Contact friends or family for advice.

Don’t trust your caller ID display to verify a call, contact the genuine organisation using a number that you have independently researched. Before doing so, ensure the call has ended and the line has cleared, wait five mins (Some scammers can simulate the sounds of lines clearing to dupe you into dialling while the line is still live), or make the call via a separate phone line where possible.

Institutions such as HMRC, police and banks will never call you to tell you that you/your money is under investigation; nor would they ever ask you to transfer or hand over money/assets for such a purpose.

Report all scams online to www.actionfraud.police.uk or call 0300 123 2040 giving as much information as possible.

Financial education and literacy is not taught in schools, which is why most people are in the dark when it comes to personal finance and are forced to rely on financial advisers.

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