ScamSmart: Can you spot a fraudulent investment?

Charles Stanley are supporting the FCA's ScamSmart Campaign, helping investors make smart investment choices.

Investment scams are designed to look like genuine investments.

On average, victims of investment fraud lost £32,000** each last year.

The Financial Conduct Authority (FCA) is urging over 55s to take their time to check that investment ‘opportunities’ are legitimate before they hand over their money. This comes as new research by the FCA reveals a fifth (22%) of over 55s, with above average incomes, suspect they were targeted by a fraudulent investment scam in the past three years, rising to a third (32%) of those aged 75 and over.

Recent pension freedoms and low interest rates offering poor returns on savings are making over 55s an increasingly attractive target for fraudsters. The new research is part of the FCA’s ScamSmart campaign, helping to protect consumers from investment fraud. The campaign features an interactive tool, the FCA Warning List, that helps investors find out more about the risks associated with an investment, and check a list of firms the FCA knows are operating without its authorisation.

Interestingly, more time and effort was being spent checking other high cost purchases, even though the money being spent is less. The average cost of major building work in our survey was £25,000, compared to the average of £36,000 spent on financial investments such as stocks or shares. Despite this, significantly more people (47%) said that they researched building work carefully and extensively, compared to those researching financial investments to the same extent (38%).

How to avoid investment fraud:

  • Reject unsolicited contact about investments.
  • Before investing, check the FCA Register to see if the firm or individual you are dealing with is authorised and check the FCA Warning List of firms to avoid.
  • Get impartial advice before investing. Find out more at www.fca.org.uk/scamsmart
  • No investment decision should be rushed. Be sceptical. Be suspicious. Ask questions and get answers you can verify.

* All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 1,004 GB adults aged 55+, in social grade ABC1, with a gross household income of £30,000+ and/ or savings of £5,000+. Fieldwork was undertaken between 27th January to 6th February 2017. The survey was carried out online.
** Figures from Action Fraud released in October 2016

Tactics fraudsters use to deceive investors

Remember: if it sounds too good to be true, it probably is!

Report a scam

If you suspect that you have been approached by fraudsters please tell the FCA using the share fraud reporting form at www.fca.org.uk/scams, where you can find out more about investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768.

If you have lost money to investment fraud, you should report it to Action Fraud on

0300 123 2040

or online at www.actionfraud.police.uk.

FAQS

Am I at risk?

On average, victims:

  • Are male
  • Aged 55+
  • ABC1
  • Already own investments
  • Consider themselves financially savvy

Investment scammers will use flattery, emotional manipulation and time pressure to take your hard-earned money, so it is always important to be aware.

What precautions can I take before making an investment?
  • The Financial Conduct Authority (FCA) is urging over 55s to take their time to check that investment ‘opportunities’ are legitimate before they hand over their money.
  • No investment decision should be rushed. Be sceptical. Be suspicious. Ask questions and get answers you can verify.

Before making an investment, remember to undertake the following actions:

  • Reject unsolicited contact about investments.
  • Before investing, check the FCA Register to see if the firm or individual you are dealing with is authorised and check the FCA Warning List of firms to avoid.
  • Get impartial advice before investing.
How can I tell if I have been scammed?

Scammers may do one or more of the following:

  • Pressure you to invest in a time-limited offer
  • Offer a bonus or discount if you invest before a set date
  • Say the opportunity is only available for a short time
  • Suggest you’ll own assets you could sell yourself if the investment doesn’t work as expected
  • Use legal jargon to suggest the investment is safe
  • Offer much better interest rates than those offered elsewhere
  • Call repeatedly and stay on the phone for a long time
  • Fraudsters will often encourage their targets to keep the investment a secret to avoid friends and family dissuading them from investing
What is the FCA’s advice to consumers?

If it sounds too good to be true, it usually is. If you’ve been approached about an unsolicited investment opportunity, check the FCA Warning List before making any decisions. You should also get impartial advice from an independent professional unconnected to the firm that has contacted you.

What should I do if I think I have been scammed?

If you suspect that you have been approached by fraudsters please tell the FCA using the reporting form at www.fca.org.uk. You can also call the FCA Consumer Helpline on 0800 111 6768.

If you have lost money to investment fraud, you should report it to Action Fraud on 0300 123 2040 or online at www.actionfraud.police.uk Find out more at www.fca.org.uk/scamsmart