Members of the influential Treasury Committee of MPs are calling for tougher action to stop investment scams and to stop scammers from acting with impunity.
With more than £4 million a day lost to investment scams and fraud in the UK and cases rising, this is a serious issue, and a new strategy is needed.
The Treasury Committee made a series of recommendations to the government, including making big tech companies liable to compensate users who are conned by scammers when using their platforms.
Mel Stride MP, chairman of the Committee, said:
“For too long, pernicious scammers have acted with impunity, ripping off innocent consumers with fraudulent online adverts, impersonation scams and dodgy crypto investments.”
“Unfortunately, fraud has soared during the pandemic and, as MPs, we’ve heard heartbreaking stories of individuals who have fallen victim to these criminals and lost large sums of money.
“While the government have made some progress in this area, we’re today calling on them to push harder and act faster on the growing fraud epidemic.”
Scams are increasingly sophisticated. Fraudsters can be articulate and financially knowledgeable, with credible websites, testimonials and materials that are hard to distinguish from the real thing.
But if it sounds too good to be true, it probably is.
Although some investment scams offer high returns to tempt you into investing, they may also offer realistic returns to make the offers appear more legitimate. Those offering or promoting products or investment opportunities found through search engines are not necessarily authorised or regulated by the FCA. You can check the FCA Warning List for firms to avoid.
So what can you do to protect yourself?
- Reject unexpected offers-If you’re contacted out of the blue about an investment opportunity, the chances are it’s a high-risk investment or a scam. Scammers usually cold call but contact can also come by email, post, word of mouth or at a seminar or exhibition. Scams are often advertised online too.
- If you get cold-called-The safest thing to do is hang up. If you get unexpected offers by email or text, it’s best to simply ignore them. You can register with the Telephone Preference Service and Mailing Preference Service to reduce the number of letters and cold calls you receive.
- Callers may pretend they are not cold calling you by referring to a brochure or an email they sent you – that is why it’s important you know how to spot the other 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 to take up the deal.
- Unrealistic returns – fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere. However, scammers may also offer smaller, more realistic returns to seem legitimate.
- Flattery – building a friendship with you to lull you into a false sense of security.
- Remote access – scammers may pretend to help you and ask you to download software or an app so they can access your device. This could enable them to access your bank account or make payments using your card.
- Check the Financial Services Register to see if a firm or individual is authorised or registered. Always access the Register from the FCA website, rather than through links in emails or on the website of a firm offering you an investment.
- Check if the firm’s ‘firm reference number’ (FRN) and contact details are the same as on the Register.Check the FCA Warning List-Use the FCA Warning List to check the risks of a potential investment – you can also search to see if the firm is known to be operating without FCA authorisation.
- Check it’s not a ‘clone firm’-A common scam is to pretend to be a genuine firm (called a ‘clone firm’).
- Get impartial advice-you should seriously consider seeking financial advice or guidance before investing. You should make sure that any firm you deal with is regulated and never take investment advice from the company that contacted you, as this may be part of the scam. Don’t let scammers take your pension-Read more
- If you are suspicious, report it to the FCA and or Action Fraud
- Be wary of future scams-If you have already invested in a scam, fraudsters are likely to target you again or sell your details to other criminals. -The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee.