There are many types of investment scams … you may have heard the expressions ‘boiler room fraud’, ‘ponzi scheme’ or ‘hedge fund fraud’. Essentially, these and many others are simply names for fraudulent investments. The money is said to be ‘invested’ in many different areas including funds, shares or bonds, foreign exchange (forex), property, fine wines and coins or stamps. Increasingly, however, scammers are turning to areas like cryptocurrency or sustainable energy.
Criminals variously pose as fund managers, stockbrokers financial advisors and investment specialists. They make their approach via email or text, or via a phone call or letter. They are generally well versed in financial markets, which enables them to make their pitch highly convincing. They set up credible websites and sales support materials and authentic looking testimonials from other ‘happy investors’, and sometimes even host seminars to enable them to pitch in person.
How to tell if someone is trying to commit investment fraud against you
Classic signs of an investment scam attempt are as follows:
- Unrealistically high returns on your investment, but this is not always the case.
- Time pressure, telling you the opportunity is available for only a short period, or a bonus or discount will be applied if the investment is made before a certain date.
- Testimonials, offering fake reviews and telling you that other clients have made substantial returns or are desperate to take up this deal.
- Speaking with authority on investment schemes and products, and using convincing websites and brochures claiming to be regulated.
- Attempting to build a friendship or flatter you.
- Some fraudsters request that you download software or enable remote access to your computer to ‘make the process easier’. Allowing this would almost certainly result in spyware being loaded on the device, and/or the fraudster accessing your bank or other accounts.
- Consider that if an individual or organisation contacts you randomly about an investment opportunity, it is likely to be either a scam or an investment carrying high risk.
- Whilst most investment scammers approach their target by telephone, contact can also come via email, post, social media post or even via word of mouth or at a seminar or exhibition. Sometimes, you may receive an email or a leaflet in the post, then a phone call referring to it to increase credibility.
- If you receive a cold call offering an investment, do not engage in conversation, but instead end the call.
- If you receive an online or text communication about an investment, ignore it and if it’s an email, delete it. Do not click on any links or attachments.
- Callers may pretend they aren’t cold calling you by referring to a brochure or an email they have already sent.
- It is not unusual for scam victims to be targeted again by either the original scammer, or another criminal who has purchased their details on the dark web. You should also ignore unsolicited offers of help in recovering money lost to a scam – this is known as a ‘recovery room scam’.