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How to avoid investment scams

Category: IFAs
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Although the ban on pensions cold-calling came into effect last month on January the 9th, fraudsters are changing tactics to utilise other channels.

54% of those who checked the FCA Warning List last year were contacted online, up from 45% in 2017. This is likely to continue to increase this year, with scammers now moving online to try to contact victims through fake websites and social media.

Last year victims of investment scams lost £29k on average, and there was over £197 million of reported losses in total.

The FCA has listed these 6 warning signs to look out for when being presented with investment advice –

  1. 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.
  2. 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.
  3. Social proof – They may share fake reviews and claim other clients have invested or want in on the deal.
  4. Unrealistic returns – Fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere.
  5. False authority – Using convincing literature and websites, claiming to be regulated, speaking with authority on investment products.
  6. Flattery – Building a friendship with you to lull you into a false sense of security.

It is worrying how difficult it can be to spot an investment scam, as the fraudsters are using increasingly sophisticated tactics. Raising awareness and educating people on what to look out for should help to protect them.

Before investing, at the very least check the FCA Register to see if the firm or individual is authorised.

FCA Register


The FCA’s ScamSmart campaign encourages those considering investing to check its dedicated website for tips on how to avoid investment fraud.

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