The rise of get-rich-quick schemes on social media has increased investment fraud, causing huge losses and mental distress for victims. The Financial Ombudsman has issued a warning to potential investors about these dangerous scams, which use “boiler room” tactics to deceive and pressure individuals into investing their money.
In the UK, investment fraud saw losses of more than £170 million last year, a 57% increase from the previous year. With the average loss per person estimated at around £20,000, the fact that almost half of the victims do not receive reimbursement from their bank is a major cause for concern.
However, not all banks are signed up to the scheme that encourages reimbursement for blameless victims, meaning that in some cases, there is little to no chance of getting your money back. For example, if the bank sends a text message warning the person before transferring the funds to the criminals, they are unlikely to receive a refund. Unfortunately, in many instances, the text message is only seen after the funds have already been sent.
Prevention is better than cure, and by being aware of what to look out for, you can protect yourself from becoming a victim of investment fraud.
What to Look Out For
- Receive an unsolicited phone call regarding an investment opportunity? Hang up!
- Check any investment opportunity with the Financial Conduct Authority (FCA)
- Check a company’s status with the FCA
- Be wary of any pressure to make a quick decision about an investment, as this is a tell-tale sign of fraud
- Ignore investment opportunities offered via social media
Key Steps for Fraud Prevention and Awareness
The first step in protecting yourself from investment fraud is to be aware of the warning signs. If you receive an unsolicited phone call about an investment opportunity, hang up. Before investing your money, it’s essential to check the company’s status with the Financial Conduct Authority (FCA).
Legitimate investment opportunities will not pressure you into making a decision, so be wary of anyone who does. Additionally, any pressure to make a quick decision about an investment should raise a red flag. Finally, it’s best to ignore investment opportunities offered through social media, as these are often scams.
By following these steps and staying vigilant, you can protect yourself from investment fraud and ensure that your money is safe. If you suspect that you may have been the victim of fraud, report it to the FCA as soon as possible.
