Thousands of people have millions of pounds stolen through 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?
Be aware
Some scammers have very convincing websites and other online presence, which makes them look like a legitimate company. Always check with the FCAOpens in a new window to make sure they’re registered and for warnings about cloned websites and unregulated firms.
Check on the FCA websiteOpens in a new window
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.
Some common scams include where scammers clone the websites of legitimate firms, or get you to invest in scam and unregulated investments which offer returns much better than the rates being offered on savings accounts.
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. If it looks too good to be true, then it probably is, and should be avoided.
How to spot an investment scam
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.
Is it a scam?
Check if an investment or pension opportunity is a scam, and find lots more information about avoiding the latest scams.
Use the ScamSmart toolOpens in a new window on the FCA’s website.
Find out more about tackling financial fraud on the Take Five website
How to protect yourself from investment scams
Important
Even if you’re using an authorised firm, Financial Conduct Authority (FCA) rules only generally apply to mainstream products, rather than ‘niche’ investments, which might be completely unregulated.
To avoid being caught out by a scam, make sure you follow these simple rules.
- Reject or ignore 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.
- Check the FCA register of regulated companies on the FCA websiteOpens in a new window Or check the FCA warning listOpens in a new window
- If you’re thinking about an investment opportunity, get independent financial advice from an FCA-regulated firm.
Just because a firm is authorised by the FCA doesn’t mean you’re automatically covered by the Financial Services Compensation Scheme or Financial Ombudsmen Service.
Financial Services Compensation SchemeOpens in a new window
Financial Ombudsman ServiceOpens in a new window
Find out how to be a ScamSmart investor on the FCA website
What to do if you think you’ve been targeted
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 had money stolen through a scam. Fraudulent companies might take advantage of this and offer to help you get some or all your money back. Ignore anyone who contacts you and claims to be able to help you get your money back.
If you’ve been sold a product that wasn’t suitable for you but the firm responsible has gone bust, you might be able to get something back through the Financial Services Compensation Scheme.
Help with scams
If you’re worried about scams, or have fallen victim to a scam. and want help to see if you may be able to get your money back, call our financial crimes and scams unit on 0800 015 4402.
