Thousands of people have their money stolen through investment fraud with over £612 million lost to these scams annually. As scams become more sophisticated and harder to spot, knowing the common warning signs can help you protect yourself and take action sooner if something doesn’t feel right.
What is an investment scam?
Be aware
Always check the FCA Firm CheckerOpens in a new window to make sure a firm is authorised, and look out for warnings about cloned websites or unregulated firms. You can also check the latest scam on the FCA’s Warning ListOpens in a new window
Investment scams are designed to persuade people to hand over money and can appear highly professional. As scams have become more sophisticated, even experienced and knowledgeable investors have been affected.
Some scammers create very convincing websites, apps, dashboards, customer portals, logos and other online content to make their operation look like a legitimate company. This can include professional branding, realistic testimonials and polished marketing materials.
How to spot an investment scam
Make sure you’re aware of the warning signs that might indicate an investment opportunity is a scam:
- Unsolicited approaches by phone call, text message, email or a person knocking on your door.
- When a firm doesn’t allow you to call them back.
- Where you’re forced to make a quick decision, or are pressured into doing so.
- Contact details you’re given, or you’ve found on their website, are only mobile phone numbers or a PO box address.
- You’re being offered a high return on your investment, but are told it’s low risk.
Check if it’s a scam
Find out how to spot the warning signs to protect yourselfOpens in a new window from scams.
You can also search Companies HouseOpens in a new window to see if a company is registered, who the directors are, and whether there are warning signs in its history.
For safer investing, see our guide to understanding investment risks before you invest.
Find out more about tackling financial fraudOpens in a new window on the Take Five website
How to protect yourself from investment scams
Important
Even if you’re using an authorised firm, Financial Conduct Authority (FCA) rules only generally apply to mainstream products, rather than ‘niche’ investments, which might be completely unregulated.
To avoid being caught out by a scam, make sure you follow these simple rules.
- Reject or ignore any unsolicited calls, emails, text messages or visitors to your door. Legitimate investment companies won’t cold call or contact you out of the blue.
- Use the FCA Firm CheckerOpens in a new window or check the FCA warning listOpens in a new window Beware – just because a firm is authorised by the FCA doesn’t mean you’re automatically covered by the Financial Services Compensation Scheme or Financial Ombudsman Service.
- If you’re thinking about an investment opportunity, get independent financial advice from an FCA-regulated firm.
Find out how to be a ScamSmart investorOpens in a new window on the FCA
What to do if you think you’ve been targeted
If something doesn’t feel right, act quickly:
Stop and think before sharing money or personal information
Protect yourself by contacting your bank straight away
Report the scam to help stop it affecting others
If you’ve been targeted, even if you’re not a victim of it, you can report it to Report Fraud. Call 0300 123 2040 or use the online reporting toolOpens in a new window on Report Fraud website.
In Scotland, report the scam to Police Scotland on 101 or Advice Direct Scotland on 0808 164 9060.
Beware of being targeted in the future, particularly if you had money stolen through a scam. Fraudulent companies might take advantage of this and offer to help you get some or all your money back. Ignore anyone who contacts you and claims to be able to help you get your money back.
If you’ve been sold a product that wasn’t suitable for you but the firm responsible has gone bust, you might be able to get something back through the Financial Services Compensation Scheme
Help with scams
If you’re worried about scams, or have fallen victim to a scam. and want help to see if you may be able to get your money back, call our financial crimes and scams unit on 0800 015 4402.
Find out more in our guides on how to get your money back:
What types of investment scams should I look out for?
All investment scams have one thing in common — they claim to offer high returns with very little risk. If it looks too good to be true, it probably is and should be avoided.
Ponzi schemes
A Ponzi scheme is where money from new investors is used to pay previous investors, rather than being genuinely invested. Eventually, the money owed becomes greater than the money coming in, and the scheme collapses, leaving most investors out of pocket.
Crypto scams
Fraudsters pressure people to invest in new or fake cryptocurrencies, often promising high returns with little risk. These scams are frequently promoted through online adverts or social media posts, sometimes using fake celebrity endorsements. Be extremely careful when investing in crypto. Read more in our blog, Investment and scam risks with cryptocurrency.
Clone firm scams
In clone firm scams, fraudsters copy the details, branding or websites of legitimate companies to appear genuine. Victims believe they are investing with a regulated firm, but their money is stolen instead.
You can check a firm’s details on the FCA’s Financial Services Register FCA Firm CheckerOpens in a new window, or look up company information on Companies HouseOpens in a new window on GOV.UK.
Unregulated investment schemes
Some scams involve investments that are not regulated by FCA, sometimes described as collective investment schemes. These may be marketed as exclusive or sophisticated opportunities, but often offer little protection if something goes wrong.
Overseas property investment scams
These scams encourage people to invest in property developments overseas, often promising guaranteed rental income or rapid growth. In reality, the development may not exist, be unfinished or impossible to sell.
Binary options scams
Binary options are often promoted as a simple way to make quick profits by predicting short-term market movements. Many of these schemes are unregulated or scams designed to take investors' money.
Online dating and romance investment scams
Fraudsters build relationships through dating apps or social media before introducing a supposed investment opportunity. These scams exploit trust and can cause significant financial and emotional harm.
Pension scams
Scammers will try to convince their victims to move their retirement savings into fake investment schemes.
In the UK, it’s illegal to cold call about pensions, so treat any unexpected pension offers as a scam.
People aged 55 and over are a particular target because they can access pension cash lump sums. However, scammers may also persuade people under 55 to transfer pensions into illegitimate schemes
Learn more about what to watch out for in our guide, How to spot a pension scam.
