Investment scams can look and sound believable, with smooth-talking salespeople, slick websites or sophisticated brochures and prospectuses. This can make it hard to tell them apart from genuine investment opportunities. But there are ways to spot and avoid scams.
It might be an opportunity to invest in shares, property or rare goods, with the promise that the returns will be high and the risks to your money are low or non-existent. But generally speaking; the bigger the proposed return, the greater the risk.
Remember: if it sounds too good to be true, it probably is!
Follow our seven steps on what to do if you think you have been scammed, are concerned about an investment or have been contacted by fraudsters.
It can be easy to fall for an investment scam: the people that run them are skilled and experienced at persuading scam targets to part with their money.
If you think you have been contacted about a scam or paid money to fraudsters there are steps you can take to protect yourself and help us stop them ripping-off more victims.
If you think you have been scammed you should stop sending money to the firm and individuals involved.
If you have given them your bank account details, tell your bank immediately.
You should report the scam to us by contacting our Consumer Helpline on 0800 111 6768. If you have been offered, bought or sold shares you can also use our share fraud reporting form.
Please provide as much information as you can about your investment and what has happened, including about the firm or person involved, their contact details and ’firm reference number’ (FRN).
The more information we have, the better our chances of assessing whether we can intervene, such as where the firm is offering investment opportunities without our authorisation – or even blatantly running a scam.
We can also act where a firm or individual has been accepting investment money or deposits without our authorisation.
However, please be aware that the chances of getting any money back are often slim.
You should also report suspected fraud and internet crime to the police through Action Fraud, which you can contact on 0300 123 2040.
Action Fraud will especially be interested if you sent money to a bank account or by another type of money transfer.
When you make a report to Action Fraud you will be given a crime reference number and the police will use your information to build up intelligence about fraud and who is committing it
If you have lost money to a scam – or even just been contacted by fraudsters – you should beware that you are likely to be targeted again.
If you have already been scammed the fraudsters will try to take advantage of you wanting to recover your money, and might offer to help you get some or all of it back.
You may be reassured that your original investment is genuine and encouraged not to pull out of the deal or report it to us or the police. You might even be threatened with legal action, although this is usually not carried through – get legal advice if you are concerned.
You also might be told you can swap your investment for another deal, with a transfer fee involved, or asked to pay a capital gains tax bill before the large profit you were promised can be released to you, even if it does not exist.
An offer to buy back the shares or investment that you have lost money on, might need an administration fee or insurance deposit to firstly be paid. But you are unlikely to ever receive the money from their supposed sale.
These secondary or ongoing scams are run from what the fraudsters call ‘recovery rooms’ and are often carried out by the same group involved in the first scam, to take more money from victims.
The second scam might be initiated by someone claiming to be from the police or a government agency. Organisation names currently being used by fraudsters include the National Fraud Intelligence Bureau (NFIB) and the US Securities & Exchange Commission.
The scammers will phone or email to tell you they know you have been a victim of fraud and offer to recover your money for you – for a fee. If you suggest they take the fee from any money they recover, the fraudsters will give reasons why this is not possible.
They may also ask for your bank account details so they can pay the recovered money into it. But instead of getting your money back the fraudsters will try to empty your bank account.
This scam will often be carried out by the same people who conned you in the first place.
They fraudsters will also hope that you investing once will mean you are prepared to take risks again.
The second scam may even come from a new individual or group, as it is likely your name and details appear on a list their group and others are using to target people.
We strongly advise you to only deal with financial services firms that are authorised by us, and check the Register to ensure they are. Keep in mind that authorised firms are unlikely to contact you out of the blue with an offer to buy or sell shares.
Remember that law enforcement and other agencies will not contact members of the public asking for their bank details or money. Law enforcement and other agencies from abroad are also unlikely to contact you directly, as they work with UK authorities to return any money to victims of fraud.