Investment scams up 57% in 2021. Here's what to watch out for

A new report from banking body, UK Finance has highlighted the scary scale of fraud taking place in the UK.

According to the report, more than £1.3 billion was stolen through fraud and scams in 2021. Many of these criminals took advantage of people’s fears during the pandemic to commit scams, often by exploiting weaknesses outside of the banking system.

As you can see from the chart below, almost every type of fraud has become more common in the last 12 months.

Source: UK Finance

Investment scams account for £171.7 million losses

In 2021, criminals stole £171.7 million using investment scams – a 57% increase on the previous year. One reason for this was the number of investors being enticed by fraudulent ads on social media offering high returns on investments.

How investment scams work

A scammer will offer you an investment opportunity that is “too good to miss”. It may promise a high guaranteed return, as long as you take advantage of the opportunity quickly. Remember, scammers like to rush people into decisions.

Often, a follow-up email will take you to a well-designed website page, filled with tempting information about the opportunity.

In reality, the opportunity is either completely non-existent or it’s an extremely high-risk investment. Scam investments like this pay out a big fee to the scammer along with a high rate of commission –both of which will be deducted from any money you invest.

If you’re considering any investment without first seeking advice from us, always proceed with caution. Remember, you can always call us to discuss the opportunity, and we’ll be happy to help confirm whether it’s genuine and right for you, taking all your circumstances into account.

10 ways to spot an investment scam

The best way to stop yourself becoming a scam victim is to understand the methods investment scammers use. Being aware of these will, hopefully, mean you’re less likely to fall victim.

1. You will be contacted unexpectedly with no prior warning. Contact will usually be by phone or email but be aware that there have been instances of people being approached in their local high street or even having someone knock at their door.

2. “Maybe” won’t cut it as an answer. The scammer will be persistent in persuading you to invest.

3. It’s unlikely that they’ll agree to you calling them back. The scammer will either demand an immediate decision or offer to call you back after a brief period.

4. Investment details will be vague. Scammers will use a lot of jargon and focus attention on the potential headline figures promising high returns.

5. Scammers will tell you this is a short-term opportunity that others have already taken advantage of, and you’ll be pressured into having to make a quick decision.

6. The caller will try to ingratiate themselves with you. They’ll ask about your family and financial plans. If you have multiple conversations, they’ll use the information you’ve shared to empathise and to reassure you the offer is a legitimate opportunity.

7. The investment company is likely to be based “offshore”.

8.  If you’re given a website address to take a look at to confirm the company the caller is from is legitimate, the details of the actual offer won’t be there.

9. The caller will offer you easily achievable high returns on your investment, but at the same time the implication will be that the investment is low risk.

10. The investment opportunity will sound too good to be true.

3 ways to help protect yourself against falling victim to a financial scam

1. Make sure anyone who offers you an investment opportunity is legitimate

There are ways to ensure the legitimacy of a firm or individual who presents you with an investment offer. Whether an investment opportunity, a pension transfer, or an outstanding bill you are being asked to pay, it is vital that you check the veracity of the source before you transfer any funds.

One easy way to find out if a “firm” is legitimate is to search the name of the source on the Financial Services Register, provided by the FCA (Financial Conduct Authority). This register holds the details of all FCA-authorised firms.

Regardless of FCA certification, if in doubt, check with us before putting your trust in unexpected offers you receive.

2. Talk to an expert before accepting financial opportunities online or over the phone

However convinced you are that an offer is legitimate, it never hurts to check with a professional before making significant financial decisions.

By working closely with your financial planner when opting to transfer your pension or make a big investment, you could reduce the risk of falling victim to an advanced scam.

Your dedicated Alexander Peter planner can also provide helpful guidance on whether an opportunity aligns with your future financial goals.

3. Be on your guard

The best way to avoid becoming the victim of an investment scam is to set a firm rule that you will not respond to, or be tempted by, any unsolicited approaches.

Stick to this rule religiously: hang up the phone and refuse to respond to an unexpected text or email. This way you’re more likely to deter even the most persistent and sophisticated scammers.

If you’re ever uncertain about an investment, even if you don’t believe it to be a scam, the FCA have a ScamSmart web page where you can check the veracity of what you’ve been offered.

Always be on your guard and remember that if an offer sounds too good to be true, it probably is.

Get in touch

If you think you’re being targeted by investment scammers, or fear that you may have been the victim of a scam, we’re happy to talk through any concerns you may have.

For expert guidance on how to protect your wealth from financial scams and criminals, get in touch. Email or call us on +44 1689 493455.

Please note: The content of this newsletter is offered only for general informational and educational purposes. It is not offered as and does not constitute financial advice.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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