Buyer Beware. Stay Vigilant for these 3 Investment Scams

Buyer Beware. Stay Vigilant for these 3 Investment Scams
July 16, 2018 Felicity Anderson

Buyer Beware. Stay Vigilant for these 3 Investment Scams

The old adage, ‘if it seems too good to be true, then it probably is,’ is usually the case with investment scams.

In this digital age spotting such scams is, unfortunately, increasingly difficult, with even professional investors falling foul of criminal’s sophisticated schemes and tricks.

Investment fraud is a costly business, with Action Fraud reporting an average loss of £32,000 per case, so in this article, CashLady looks at how to stay vigilant for the top three investment scams currently in operation.

The rise and rise of investment scams

Investment scams are nothing new, but fraudsters constantly adapt and change up the types of scams that they peddle as news of one type of scam becomes widely known.

These fraudsters typically latch on to new trends and technologies, using the opportunity to dazzle potential investors with early stage, yet complex investment products that they may have heard of.

Below we look at some of these investment scams in more detail, although it is worth noting that some of these opportunities may be genuine if a little risky.

Cryptocurrency investment scams

Bitcoin and other cryptocurrencies are a hot topic right now but should be considered an extremely risky investment at best.

Making the news recently, it emerged that UK scammers were using well-known names to dupe people into handing over the personal details in cryptocurrency investment scams.

According to Action Fraud, fraudulent websites claiming to offer cryptocurrency investments were using fake recommendations from well-known personalities, such as Deborah Meaden from the BBC’s Dragons’ Den and Martin Lewis, the founder of, without their consent.

In March alone, Action Fraud received 21 reports of this kind, with a total reported loss of more than £34,000 to victims.

Not only is cryptocurrency a risky market, but direct investment in such currencies is unregulated in the UK, meaning you won’t have the protections from the Financial Services Compensation Scheme or Financial Ombudsman Service.

If you are looking to invest your hard-earned money, then it’s probably best to investigate a better protected and more predictable product.

Binary options investment scams

Buyer Beware. Stay Vigilant for these 3 Investment Scams

Investment scammers are increasingly using social media to attract victims, using images of wealthy lifestyles to attract people and then tricking them with professional looking websites that promise big returns, only to deny access when they attempt to withdraw their money.

Binary Options are called ‘Binary’ because there are only two possible outcomes – win or lose.  Trading means betting on whether the price of, say, a commodity, such as gold or oil, will rise or fall.

On 3rd January 2018, binary options became a regulated investment product, meaning that all firms trading in binary options must be authorised by the FCA, meaning that you can check whether a firm is registered or whether it’s a front.

Binary options scams alone have been identified as one of the biggest frauds in the UK currently, with losses reported to Action Fraud totalling £32m last year.

Share and bond scams

With share and bond scams it’s likely that you’ll be contacted out of the blue, proffered a hard to refuse investment offer, promising huge returns.

Scammers often use high pressure ‘sales,’ tactics in these cases and it’s likely that the shares on offer are massively overpriced or totally made up. You may also be asked to part with a large sum of money upfront as a form of ‘security.’

Share and bond scams are often carried out by clone firms, that’s fake firms that are pretending to be reputable ones.

According to Action Fraud, the largest loss to a share scam recorded by police was £6 million.

How to spot an investment scam

Always be wary when contacted out of the blue by anyone making big promises in return for little risk.

If they are employing high-pressure tactics, such as urging you to make a decision right away then cease contact and certainly don’t do businesses with them.

When considering an investment opportunity online remember that lots of scammers pose as legitimate firms, so do your research and check them out.  Take online reviews with a pinch of salt as they are easily faked.

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 and seek impartial advice before parting with your money and investing.