Protect Yourself from Investment Scams

Investment scams involve fooling the victim into handing over money for an investment that seems legitimate and often has a professional looking website, marketing material and even testimonials.

In fact, investment scams have now become so sophisticated that even professional investors have been fooled by them. The golden rule is that no investment comes without risk, so if you find yourself being offered high levels of return for very little risk, you are almost certainly dealing with an investment scammer.

There are three main types of investment scam:

  • An investment that doesn’t exist
  • An investment that does exist, but the scammer takes the money instead of investing it
  • The scammer pretends to represent a legitimate and trusted investment company.

How to spot investment fraud

  • You are guaranteed a high return on your investment, for low risk. This is simply not possible. Only high-risk investments can offer the chance of higher returns than other investments might produce, but even then, there is no guarantee.
  • You receive an unsolicited approach by someone offering you an investment. This could be a phone call, a text message, an email or even a person knocking on your door.  This should raise an immediate red flag. Scammers have gotten wise to the fact people are wary of cold callers and may try to hide the fact that they are doing this by referring to a brochure or an email they have sent you. Don’t fall for it.
  • You are tempted by an advertisement you see on social media. If you spot a ‘too good to be true’ investment opportunity on social media platforms such as Facebook, Instagram and Twitter, often accompanied by pictures of expensive, luxury items, be wary.  The scammers often have convincing social media profiles or websites with bogus reviews. Legitimate investment companies do not need to employ these tactics.
  • You feel pressurised into making a quick decision. If there was a genuine investment opportunity offering great returns for low risk, there would be no need for anyone to pressure you into making a quick decision with a limited time offer, bonus or discount if you sign up before a deadline.
  • You are given a mobile phone number as a contact. Also check the website to see if there is a landline. If there’s only mobile phone numbers on the website and a PO box as an address, this may not be a legitimate business.

How to prevent investment fraud

  • Reject any unsolicited calls, emails, text messages or visitors to your door. Legitimate investment companies won’t contact you in this way.
  • Do not believe anyone who tries to tell you that you should withdraw money from your pension pot before you are aged 55, in order to take advantage of a great investment opportunity. You will end up with hefty penalties for withdrawing your money early, and that’s before the scammer has taken a penny.
  • Check if the firm is registered on the Financial Conduct Authority (FCA) website. In the UK, a firm must be authorised and regulated by the FCA to do most financial services activities. You can check the register here. Remember though, the individual could be lying about the company they work for, so this check alone is not enough.
  • Research known current investment scams on the FCA website.  Remember, this could be a new scam that is not yet known, so this check alone is not enough.
  • If you are interested in making an investment, get independent financial advice from an FCA-regulated firm.

How to report investment fraud

  • Report the scam to Action Fraud, the reporting centre for fraud and cyber-crime in England, Wales and Northern Ireland:
    • Call 0300 123 2040 Monday to Friday 8am - 8pm
    • Use the Action Fraud online reporting tool
  • Inform us straight away via email:
  • Contact the Police on 101
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