Protecting yourself from investment fraud

Keeping you and your money safe is our top priority, and we have stringent safeguarding measures in place to help protect all our customers. But there are also steps you need to take to protect yourself from fraud.

To help you identify potential scams and stay safe, we’re publishing a series of articles on fraud protection. This article looks at investment fraud.

What is investment fraud?

Investment fraud, or an investment scam, is when a criminal tries to trick you into giving them money by pretending they’re offering a profitable investment opportunity.

There are many ways scammers might try to trick you. They may run online or social media adverts for ‘get rich quick’ schemes with fake endorsements from celebrities, perhaps based around investing in cryptocurrencies, currencies, stocks or bonds.

The scammer could also impersonate a known, reputable company or even a friend or family member, or they may groom you over time to gain your trust. These scams can be harder to spot, as they can appear genuine.

Investment fraud is often followed up with a secondary scam, in which fraudsters claim they can help a victim recover lost money.

An example of investment fraud

Alan had considered investing for a while and finally decided to go for it.

He searched for an investment account online and saw an ad for a company he’d heard of before. They had good reviews online, so Alan clicked through on the advert, which offered a sign-up bonus.

Alan soon got a call from an account manager at the company, who helped him set up his investment account. He received a confirmation email, a welcome pack in the post, and access to his online account.

Alan’s account manager got in contact with him regularly over the following months. They sent him statements showing how well his investments were performing and encouraged him to invest more money to maximise his returns.

However, after a while Alan’s account manager suddenly stopped contacting him. Alan couldn’t log into his online account or get in touch with the company.

The whole thing had been a scam, with the original advert linking through to a fake website. Alan had been transferring his money to a fraudster the entire time.

Five tips on how to protect yourself from investment fraud

1.      Look out for red flags

Remember that if something seems too good to be true, it probably is. If a person or company offers high returns with low risk, or suggests you could make a lot of money very quickly, this could be a sign they’re trying to con you.

Another common scamming tactic is to apply pressure. They may try to emotionally manipulate you or rush you with a bonus, discount, or time-limited offer. If you feel pressured, take a step back.

2.      Be cautious

As well as watching out for red flags, it’s always best to keep your guard up when it comes to money.

In particular, be wary of adverts online and on social media. Scammers can take out adverts pretending to be legitimate companies. Simply being aware of this can help you identify which ads are real and which ones are fake.

It’s best to take your time and err on the side of caution whenever money is involved.

3.      Do your due diligence

Following on from the previous point, make sure you thoroughly research a company before handing them your money.

First, look into whether the company is a genuine, trusted name with good customer service. Next, make sure you’re dealing with the actual company. Double check the website to ensure it’s legitimate. Scammers can clone sites and make them appear genuine by slightly changing the web address, such as web.site.com versus website.com.

Likewise, if someone contacts you saying they’re from a particular company, verify their identity. You can do this by ending the conversation and then contacting the company through a known phone number or email address.

4.      Check the FCA website

When you’re doing your research around potential investments, check the Financial Conduct Authority’s (FCA) website.

You can use it to search for information about a firm, including their registered contact details, and you can access the FCA’s Warning List, which contains any unauthorised or cloned firms that the FCA is aware of.

5.      Speak to someone

Finally, it’s always good to get another perspective. Speak to family, friends, or – even better – a trusted financial advisor. An outside view may help you to pick up on red flags you might have missed.

If someone targets you

If you think someone’s targeting you for investment fraud – either through online adverts or direct communication – firstly report them to any organisations concerned.

For instance, if you see an advert on a social media channel, report it to the channel. If the scammer is pretending to be another company, report it to that company too.

You should also report the incident to Action Fraud, which is the centre for reporting fraud and cybercrime in the UK, or to the relevant authority in the country you’re in.

If you’ve been a victim of investment fraud, you could be targeted again. Fraudsters may contact you claiming they can help you recover your money. This is a secondary scam, so hang up immediately.

More information on investment fraud

As mentioned above, the FCA website is very useful for finding registered company contact details and checking if a firm is genuine. It also has great resources for both consumers and firms, as well as a tool called ScamSmart dedicated to helping people invest safely.

As well as being able to report incidents on the Action Fraud website, you’ll also find lots of useful advice, guidance, and free tools to help you protect yourself from different types of fraud.

The independent charity Victim Support can help you if you’ve been a victim of investment fraud. They offer specialist help to victims, and they have a wealth of resources on their website.

Lastly, if you’re sending money overseas with Currencies Direct and have any security concerns at all – even if something just feels ‘off’ – get in touch with us and we’ll be happy to help.