Warning signs which you can use to avoid falling victim

Every year thousands of people lose millions of pounds due to investment scams. The internet and advances in digital communications mean these kinds of scams are becoming more common and harder to identify. Thankfully there are some warning signs you can use to avoid falling victim to scammers.

Investment scams aim to get unsuspecting people to hand over money. On the face of it, they can seem perfectly legitimate, appearing knowledgeable with websites, testimonials and marketing material. The most infamous kind of investment scam is a Ponzi Scheme, where money is collected from new investors to pay previous investors. Eventually the money owed is greater than the money being collected and the scheme collapses, leaving all the investors out of pocket.

Today, due to the internet and digital communications, investment scams can be much more complex. Some of these scams are so convincing, even professional investors have fallen victim to them.

Since the pensions freedoms were introduced in April 2015, older people are particularly vulnerable to investment scams because they can access cash lump sums from pension pots. All investment scams have one thing in common. They claim to be able to offer high levels of return for very little risk.

Don’t feel pressured

Make sure you are aware of the warning signs that might indicate an investment opportunity is a scam:

• Unsolicited approaches by phone call, text message, email or a person knocking on your door.
• When a firm doesn’t allow you to call it back.
• Where you’re forced to make a quick decision, or are pressured into doing so.
• Contact details you are given, or found on their website, are only mobile phone numbers or a PO box address.
• You are being offered a high return on your investment, but are told it’s low risk.

Follow simple rules

To avoid being caught out by a scam, make sure you follow these simple rules:

• Reject any unsolicited calls, emails, text messages or visitors to your door. Legitimate investment companies will not cold call, or contact you out of the blue.
• Check the FCA register of regulated companies, or the FCA warning list.

If you are thinking about an investment opportunity, seek professional financial advice from an FCA regulated firm.

If you’ve been targeted 

If you think you’ve been targeted by an investment scam, report it to the FCA Scam Smart website. If you have lost money to a suspected investment fraud, you should report it to Action Fraud on 0300 123 2040.

Beware of being targeted in the future, particularly if you’ve lost money to a scam.Fraudulent companies might take advantage of this and offer to help you get some or all of your money back.