How to spot an investment scam

Thousands of people lose millions of pounds due to investment scams every year. The internet, and advances in digital communications, mean these kinds of scams are becoming more common and harder to identify. Thankfully, there are some warning signs, which you can use to avoid falling victim to scammers.

What is an investment scam?

arrow icon

Investment scams aim to get unsuspecting people to hand over money – they can seem perfectly legitimate, appearing knowledgeable with websites, testimonials and marketing material.

The most famous kind of investment scam is a Ponzi Scheme, where money is collected from new investors to pay previous investors. Eventually, the money owed is more than the money being collected and the scheme collapses, leaving all the investors out of pocket.

Today, due to the internet and digital communications, investment scams can be much more complex. Some of these scams are so convincing, even professional investors have fallen victim to them.

Since the pensions freedoms were introduced in April 2015, people from the age of 55 are particularly vulnerable to investment scams because they can access cash lump sums from pension pots. However, it's worth being aware that scammers lie and convince people of any age to transfer into other (illegitimate) vehicles before 55. 

All investment scams have one thing in common – they claim to be able to offer high levels of return for very little risk.

How to spot an investment scam

arrow icon

Make sure you’re aware of the warning signs that might indicate an investment opportunity is a scam:

  • Unsolicited approaches by phone call, text message, email or a person knocking on your door.
  • When a firm doesn’t allow you to call them back.
  • Where you’re forced to make a quick decision, or are pressured into doing so.
  • Contact details you’re given, or found on their website, are only mobile phone numbers or a PO box address.
  • You’re being offered a high return on your investment, but are told it’s low risk.
arrow icon

How to protect yourself from investment scams

arrow icon

To avoid being caught out by a scam, make sure you follow these simple rules.

  1. Reject any unsolicited calls, emails, text messages or visitors to your door. Legitimate investment companies won’t cold call or contact you out of the blue.
  2. Check the FCA register of regulated companies on the FCA website Or check the FCA warning list
  3. If you’re thinking about an investment opportunity, get independent financial advice from an FCA-regulated firm.
arrow icon

What to do if you think you’ve been targeted

arrow icon

If you think you’ve been targeted by an investment scam, report it to the FCA ScamSmart website

If you’ve been targeted, even if you’re not a victim of it, you can report it to Action Fraud. Call 0300 123 2040 or use the online reporting tool on Action Fraud website

In Scotland, report the scam to Police Scotland on 101 or Advice Direct Scotland on 0808 164 9060.

Beware of being targeted in the future, particularly if you lost money to a scam. Fraudulent companies might take advantage of this and offer to help you get some or all your money back.

Was this information useful?
Thank you for your feedback.
We’re always trying to improve our website and services, and your feedback helps us understand how we’re doing.
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Talk to us live for…
Talk to us live for…
Talk to us live for pensions guidance using…
Talk to us live for money guidance using…
Hours
  • Mon – Fri:9.00am – 5.00pm
  • Sat, Sun and bank holidays:Closed

* Calls are free. We’re committed to providing you with a quality service, so calls may be recorded or monitored for training purposes and to help us develop our services.

Talk to us live for money guidance using the telephone
Hours
  • Mon – Fri:8.00am – 6.00pm
  • Sat, Sun and bank holidays:Closed

* Calls are free. We’re committed to providing you with a quality service, so calls may be recorded or monitored for training purposes and to help us develop our services.

Talk to us live for pensions guidance using web chat
Hours
  • Mon – Fri:9.00am – 6.00pm
  • Sat, Sun and bank holidays:Closed
Talk to us live for money guidance using webchat
Hours
  • Mon – Fri:8.00am – 6.00pm
  • Sat:8.00am – 3.00pm
  • Sun and bank holidays:Closed
Talk to us for pensions guidance using our web form

We aim to respond within 5 working days

Talk to us for money guidance using our web form

We aim to respond within 2 working days

Talk to us live for money guidance using WhatsApp

Download app: WhatsApp

For help sorting out your debts or credit questions. For everything else please contact us via Webchat or telephone.