The Financial Conduct Authority is warning investors to be vigilant when investing their hard earned cash. Action Fraud has revealed that over £197 million was reported as stolen by scammers in 2018. On average, victims were conned out of £29,000 each, the FCA and Action Fraud are warning investors to be on the lookout for increasingly sophisticated fraudsters.

Data from the FCA call centre shows, that the most common scam reported involved investments in shares and bonds, forex and cryptocurrencies. The companies offering these products are not registered with the FCA and together they account for 85% of all reported investment scams in 2018.

The FCA say that more and more people are being targeted online rather than cold-calling people. Fraudsters are now targeting their victims through emails, professional looking websites and social media channels like Facebook and Instagram. The FCA says that 54% of people who were contacted by fraudsters, checked with their official register before engaging with potentially fraudulent companies, this figure was up from 45% in 2017.

The FCA Warning List is a tool that helps users learn about the risks associated with an investment, the service also provides users with a list of firms the FCA knows are operating without its authorisation.

Contact methods may vary but the FCA says their tactics remain the same. The financial regulator is working with experienced investor, Alvin Hall, to educate the public on the most common tactics used by investment scammers.

Alvin Hall is supporting the campaign and said: “The amount lost last year to investment fraud is staggering, over £197 million according to Action Fraud. If my 30 years of experience in investment markets has taught me anything, it’s this – regardless of how confident you are about what you’re investing in, you should also be just as confident you know who you’re investing with. The FCA Warning List is a fantastic resource for smart investors to use to protect themselves from scams. Investment scams are becoming more and more sophisticated and fraudsters are using fake credentials to make themselves look legitimate. The FCA is working harder than ever to help protect the public against this threat. Last year we published over 360 warnings about potentially fraudulent firms. We want to spread the message so we can all better protect ourselves from investment scams”.

The FCA is urging people to be vigilant when making investment decisions, and to look out for the following warning signs:

Unexpected contact: Traditionally scammers cold-call but contact can also come from online sources e.g. email or social media, post, word of mouth or even in person at a seminar or exhibition.

Time pressure: They might offer you a bonus or discount if you invest before a set date or say the opportunity is only available for a short period.

Social proof: They may share fake reviews and claim other clients have invested or want in on the deal.

Unrealistic returns: Fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere.

False authority: Using convincing literature and websites, claiming to be regulated, speaking with authority on investment products.

Flattery: Building a friendship with you to lull you into a false sense of security.

Director of Action Fraud, Pauline Smith said: “These statistics show that investment fraud is a major threat, with fraudsters doing everything they can to manipulate potential victims into making investments. Victims are often coerced or persuaded into parting with significant amounts of money and this can have a devastating impact on their wellbeing and finances. We are working with the FCA to raise awareness of investment fraud and would urge anyone who is considering in investing to check with the FCA before parting with their money. If you think you have been a victim of investment fraud, report it to Action Fraud.”

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