Fraudsters move with the latest trends – they’re always looking for new and sophisticated ways to trick us. They were quick to take advantage of the Coronavirus pandemic and are now adapting their methods to exploit our fears over the cost of living crisis.

Recent data shows that over £1.3bn was stolen by fraudsters in the UK last year. The figures also reveal an alarming rise in investment scams, which jumped by almost 60% in 2021, accounting for £171.7m in losses.

Investment scams are becoming so convincing that even experienced investors have fallen victim to them. To protect your hard-earned money, it’s important to stay vigilant of investment fraud and watch out for red flags.

What’s an investment scam?

Investment scams come in different forms, but they all share one thing in common: they typically promise high or guaranteed returns with very little risk.

Most investment scams also involve one of the following:

• The scammer promotes an investment that doesn’t exist.

• The scammer promotes an investment that exists, but they keep the money instead of putting it into the opportunity.

• The scammer pretends to represent a legitimate company. Some criminals copy websites and use branding from FCA-authorised companies to make them look genuine. Others might even ask you to download software that gives them remote access to your computer.

• The scammer says you should take out a loan – to either invest or to unlock funds from an investment – which will then be written off so you don't have to pay it back.

Beware of cryptocurrency fraud

The meteoric rise of cryptocurrencies in recent years has drawn many people into investing. But the lack of regulation in the market and real knowledge among most investors has created easy loopholes for crypto scams. So, it’s no surprise that the crypto space is full of get-rich-quick schemes and fake celebrity endorsements.

Fraudsters typically promote low-value or nonexistent crypto assets on social media, using images and false testimonials from respected figures without their consent. The ads link to professional-looking websites that contain misleading information to convince you to invest.

Companies running these scams are often based overseas to avoid regulatory requirements. Also, most crypto assets aren’t regulated by the Financial Conduct Authority (FCA). This means that if you buy cryptocurrencies and things go wrong, you won’t be protected by the Financial Services Compensation Scheme (FSCS).

If you don’t understand how a cryptocurrency or an investment works, it’s best to steer clear of it.

How to avoid falling victim to investment scams

• Reject any cold calls, text messages or emails. If someone contacts you out of the blue about an investment opportunity, block them.

• Always be suspicious of offers that sound too good to be true. Celebrity promotion of a cryptocurrency or an investment should generally be considered a red flag.

• Find out if a company is legitimate by checking if they’re authorised by the FCA. The FCA also has a warning list you can use to see if an investment is a scam.

• Cryptocurrencies are considered very high risk, speculative investments. Avoid companies that are operating illegally – you can find a list of unregistered crypto asset businesses here. Note that even if a crypto asset firm is registered with the FCA, you won’t have the same protections for crypto activities as you may have with other activities supervised by the FCA.

• Be cautious if a company based outside of the UK contacts you with investment opportunities.

• Don’t let anyone pressure you to act on the spot. Fake investment opportunities are usually advertised as discounts or limited-time offers. Do your research, ask questions and seek independent financial advice from an FCA-regulated firm before you invest.

• Don’t give remote access to your computer or personal device – a genuine organisation will never ask you to do this.

• Never share your personal information online.

• Watch out for any messages that ask you to follow a link or download software.

• Inspect the URL. Use Get Safe Online’s tool to check if a website is likely to be legitimate or a scam.

• If you’ve been asked to pay a fee upfront before accessing your investment, it’s probably a fraud – you may never see your money back.

• Be wary if you’re told not to tell anyone about the offer you’ve been given.

• Stay on top of your finances. If you spot any suspicious transaction or activity on your bank account, contact your bank immediately.

Other helpful resources

• If you think you’ve been targeted by an investment scam, report it to the FCA and Action Fraud.

• Get Safe Online offers advice on protecting yourself against online scams and identity theft.

• Cifas provides tools and tips to help keep your personal information safe and prevent you from becoming a victim.