Investment scams - How to spot and report one?
Rise in investment scams in the UK
Here’s how to spot, avoid, and report and investment scam
Many people might be familiar with the numerous investment scams within the UK. It's one of the biggest fraudulent schemes and it can often involve criminals calling numerous people to trick them into investing their hard-earned money into a fake scheme or business.
For example, we have all had (or at least know someone) who has received a call regarding their pension. These callers will tell you that by transferring your pension into their scheme, you will be able to access it sooner than the legal age.
Though many people will hang up the moment someone starts talking about their pension, those who are desperate and need access to money might be more inclined to buy into it. However, placing your pension in the hands of these people can cause you to lose your whole life savings.
Fraudulent investment scams are designed to sound realistic and plausible. Cybercriminals are trained to sound helpful and kind. They will tempt you with words that will have you believe your money is safe. They might even have you believe you can gain more money through this investment.
Many business owners should also be careful of fake share investment scams. This is because more and more people are investing money into businesses and stocks. So, criminals are seeing this as an opportunity to exploit hard-working owners.
They typically spend hours researching their victim to see if they have any previous investments and shares. They can disclose this information to their victim to make them seem genuine.
These types of criminals will often go after business owners, knowing they will have money to buy into their scam.
What are the signs of an investment scam?
There are numerous signs you need to look out for with investment scams. These include:
Receiving unknown or unexpected calls, texts, or emails. These will typically be from companies that you've either never corresponded with or never handed your details to. Did you know that a company can't legally contact you for marketing purposes without your permission? If you haven't given consent for a company to contact you for marketing purposes it's illegal, whether they’re trying to make you invest or not.
They might pressure you into clicking on a website. Just because someone has directed you to a website that looks legitimate, sent out genuine-looking paperwork, or even sent you a few upfront payments, doesn't mean it's not a scam. Cybercriminals are extremely clever. If they need to put the time into creating fake websites and documents, as well as sending over a few payments, just so they can trick you into handing over a huge lump sum, they will do that.
If you're browsing the internet and notice a few ads for an investment that seems too good to be true, it probably is. Again, cybercriminals will use these ads to lure their victims into handing over sensitive information or investing in fake schemes.
If someone is trying to encourage you to buy shares or invest in a business, they shouldn't be making you feel pressured. If they are making you feel like you need to decide on the spot or pressuring you into investing, this is a huge red flag. Placing your money in the trust of investment is a huge responsibility. It could cost someone big time. So, this is never a decision that should make you feel like you HAVE TO or SHOULD do it.
They can also pressure you by telling you the offer is only available for a short period. This should be an instant sign that it is a scam. If an investment is genuine, you should be able to take time to think and research before making a decision. Especially if this decision is costing you a lot of money.
They might tell you that you are being offered a high return on your investment, but it's low risk. All investments are a risk. Especially when you're putting a lot into it. Cybercriminals will use language like this to trick you. So, always be on guard.
There are many more signs to look out for. Remember, always be careful what you invest your money into as you might not get it back.
How do I protect myself against investment scams?
There are a few ways you can protect yourself against investment scams. One of the most obvious ways is to not part with your money so easily. Here are some other tips you should follow.
Always do your research. You wouldn't purchase a home without viewing it and reviewing the correct paperwork through an agency... so why treat a business investment differently? If you think the investment sounds good, get independent financial advice. Always ensure you seek out your financial advisor and not the one the caller has recommended.
Did you know the FCA have a list on their website of calls and companies that it is concerned about? If you receive an investment call, check through this list to see if others have made a complaint regarding the same call. However, just because it might not be on the list, doesn't mean it isn't an investment scam. So, always remain cautious.
The FCA can also tell you if the company calling you, is a regulated financial firm. Just because they have told you they are, doesn't mean it's true. Don't take their word for it just because they use genuine marketing terms or sound like they know what they're talking about. They will have received training before making these investment scams. So, make sure you do your research.
Wherever possible, reject any emails, texts, or visitors that come to your door claiming they have an investment for you. We understand that it might be impossible to ignore phone calls from unknown numbers as the likes of the NHS use this when making phone calls. However, if you do answer it and it's from a company wanting you to invest, hang up immediately and block the number. No genuine company will cold call and seek investors.
These are just a few steps you can take to avoid an investment scam. However, the most important thing you can do is be vigilant when handing your money over.
If you own a business and are looking to expand and invest in another, seek out additional advice from your financial advisor.
What should I do if I’m the victim of investment scams?
If you believe you are the victim of investment scams, you must take the right steps to report it. Even if you aren't sure, it's not worth the risk. Follow these simple steps:
Report it to the FCA ScamSmart website - Not only can the FCA look into this, but if it happens to be an investment scam, they can warn others. You wouldn't want them making more money from other people. The sooner other people realise these are investment scams, the sooner these people can be prevented and hopefully caught.
Report it to Action Fraud. This will allow an investigation to be conducted. Even if you didn't fall for the investment scams, it's important others who are more vulnerable are warned.
If you have fallen for investment scams, it's vital you are careful in the future. Scammers tend to remember who was most susceptible and will attempt to reach out again. They might even use their past success against you by claiming they are from a company that can help you get some or all your money back.