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What are Investment Scams?
Investment scams are one of the many ways criminals try and steal your money. They try to convince you to invest in a scheme, shares, or commodities, which either don’t exist, or aren’t worth the money paid for them. These scams are becoming increasingly common and can take a variety of forms, so it's really important you know how to spot them.
"Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money” FCA warns consumers of the risks of investments advertising high returns based on cryptoassets | FCA
Other common investment scams
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Whilst it's really important to be cautious of any approach asking you to invest, the below are some of the more common scams we see.
Cloned Firm Investment Scams
Cloned firms are the criminal’s way of getting past the due-diligence and authentication checks it’s expected people will undertake, before making an investment. By pretending to be a legitimate firm the potential investor will get a positive response when they:
• Check the firm is regulated by the FCA
• Investigate online reviews on the company
• Receive legitimate looking documentation
Criminals are aware ‘cold calling’ tactics are widely warned about now and have moved on to other methods to find their next victims. For example, they may host fake comparison sites that give the impression you found the investment yourself, meaning it’s less likely to be considered a scam.
Always use the contact details on the FCA Register, not the details the firm gives you. You should also check the firm’s details with directory enquiries or Companies House to make sure they’re the same.
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Recovery Room scams
Criminals approach investors who have been scammed or had failed investments, offering to help them recover their money, usually for an upfront fee. The criminals usually don’t provide an explanation as to how they’ll recoup the funds, or if they do, it’s likely the explanation will be false or implausible.
Be extremely wary of any unsolicited contact from people claiming to know about your previous investments accompanied by an ask for an upfront fee, usually disguised as tax or miscellaneous legal costs. This is another scam trying to extort further funds.
Recovery rooms generally use a web-based email address. The FCA never uses webmail providers to contact consumers, nor does the Government, law enforcement agencies or law firms.
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Investments in any form of cryptocurrency should only be ever be considered by persons who are enthusiastic in the technology, who understand it completely, and are only using money they can afford to lose. If you are looking to invest in cryptocurrency but are relying on the advice of someone else, can you be sure they’ve got your best interests at heart?
Unexpected contact
From someone you don’t know, who seems to know a lot about you. This doesn't mean they're who they say they are. If you're not sure - hang up!
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Time pressure
You may be promised a discount if you invest by a certain date, don't let this pressure you. Always think it through carefully and seek independent advice.
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Pop up adverts
Offering investments with well-known banks and asking you to fill out a form. Always contact the bank directly.
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Steps to protect yourself before you invest
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Seek reputable, independent financial advice before you commit to an investment. Never take advice from the company that contacted you directly.
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Before you hand over money ensure the firm you use is on the FCA register and is allowed to give financial advice (opens in new window). You should also verify any contact details via the register too. If they're not on here, or the details don't match, it's likely a scam.
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Check the FCA list of unauthorised businesses which is updated regularly. They list businesses believed to be involved in fraudulent activities. You can also carry out further scam checks on this website.
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Be cautious of all unexpected calls, emails, and text messages. Don’t assume they’re genuine, even if the person seems to know a lot about you or your previous investments.
Think you've been caught out?
If you think you've handed money or personal details over to a scammer, we're here to help. It's important you contact us straight away.
Social engineering
Social engineering is the way fraudsters manipulate people so that they hand over personal information.
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Fake emails
Fraudsters send emails pretending to be from a trusted organisation but they’re asking you to give away personal information.
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Security centre
Our hub for all things fraud and scam related. Find out the latest trends
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