THE FINANCIAL Conduct Authority (FCA) has revealed that £197m was lost through investment fraud in 2018, with cryptocurrency and bond scams among the most common.
According to new data from Action Fraud, a total of 85 per cent of last year’s fraud instances were related to investments in shares, bonds, forex and cryptocurrencies run by firms that are not authorised by the FCA. The average victim lost £29,000 to these scams last year, while more than half of those affected were contacted via online sources.
“These statistics show that investment fraud is a major threat, with fraudsters doing everything they can to manipulate potential victims into making investments,” said Pauline Smith, director of Action Fraud. “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.”
The Action Fraud data also found that online investment scams are on the rise, taking over from the traditional cold call as the most popular method for fraudsters. Last year, 54 per cent of victims were targeted via email, professional looking websites and social media channels – up from 45 per cent in 2017.
This data is based on the number of people who checked the FCA Warning List – a tool that helps users find out whether or not a firm is being fully regulated and allows fraud victims to report suspicious activity.
The FCA has urged consumers to be aware of a few common warning signs that may signal that they are being targeted by fraudsters. These include: unexpected contacts from an unknown person; a time limit being placed on a particular offer; fake reviews; unrealistic returns that sound too good to be true; and flattery.
Action Fraud and the FCA have also advised consumers to check the FCA Register to check whether a company is fully authorised, and to check the FCA Warning List for firms to avoid.
“The first quarter of the year is a common time for people to make their financial plans for the year, including investments,” said Mark Steward, executive director of enforcement and market oversight at the FCA.
“But before you invest do your homework. Always check the FCA’s register to make sure you’re dealing with an authorised firm and use the contact details on our register, not the details the firm gives you, to avoid ‘clones’. Also check the FCA Warning List of firms to avoid. Remember, if in any doubt – don’t invest!
“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. And we want to spread the message so we can all better protect ourselves from investment scams.”