Investment scams – what to look out for and what to do if you’ve been scammed

Our level of understanding of the most common scams and frauds has never been higher. In fact, our research* shows that the vast majority of us can easily spot an approach from a scammer.

However, even though we have a good level of knowledge about scams, there are still two reasons why we might fall victim.

The first is that unfortunately some of them are really good at what they do. Even if we know something’s likely to be a scam in theory, we fall for it in practice. The second is that just when we’ve got to grips with the latest threat, scammers will find a new way to part us from our money.

So as part of Fraud Awareness Week, it’s worth getting on top of some of the scams we’re more likely to fall for at the moment.

*Opinium survey conducted for HL, December 2020, 2,000 participants.

Booming fraud trend

In the first half of this year, criminals stole £753.9 million through fraud, up almost a third in a year. There was a particularly striking boom in what’s known as ‘push payment fraud’ – which is up 71% to £355.3 million. This is where we’re tricked into willingly transferring money to criminals. These scams often start with fraudsters getting in touch out of the blue, either through email, a phone call, or a text message. They use a variety of techniques to persuade us to transfer money to them.

The biggest rise in this kind of fraud is impersonation scams, when they often call claiming to be from your bank or from the police. Cases like these are up 129% in a year. According to our survey, on paper 89% of us would spot this kind of fraud, but these criminals use incredibly convincing approaches.

The industry calls these techniques ‘social engineering’, where you’re cleverly manipulated into believing handing your money over is the most sensible and safest option. The fraudsters will also make their approaches seem even more realistic by ‘spoofing’ your bank’s number so it looks like a call is coming from the official number. They’ll also set up convincing-looking fake websites to steal your details so they can tailor the phone call to make you really believe it’s your bank.

Investment scams

Fraudulent investment scams were also on the rise. Losses in the first half of 2021 were almost double those in 2020, at £107.7 million. Some of these use investments which feel familiar in order to make people feel more comfortable with them, like property or wine. Others use investments which feel more exciting or glamorous, like gold or cryptocurrencies. All of them tend to promise high returns, and when you transfer your money, the criminals vanish with it.

The popularity of cryptocurrencies make them irresistible to both fraudsters and victims at the moment. Action Fraud found that between the start of this year and the middle of October, over £146 million had been lost to cryptocurrency fraud – that’s 30% more than the whole of 2020. The average victim lost a staggering £20,500.

The Squid Game token was one of the highest profile crypto scams in recent months. Speculators thought they were buying into a new coin that could unlock an exciting new online game. Unfortunately, despite the fact buyers couldn’t sell once they’d bought in, it still drew in huge numbers of speculators. Once the price soared, the rug was pulled, the website closed, and it lost all value. The scammers made off with just under £2.5 million.

While in some cases criminals will target people through emails, phone calls, or texts, they’re also turning to new methods. These include social media accounts, and advertising on search engines, to draw out people by promising high returns with little to no risk. Another common tactic is online adverts, emails and websites featuring fake celebrity endorsements. Some 558 investment fraud reports related to bogus celebrity endorsement.

Action Fraud also warned of a growing trend to impersonate private banks and investment companies. Some fraudsters will set up cloned websites, while others will establish social media accounts claiming to belong to a respectable investment company, but really operated by a fraudster. One of the problems is that the lack of regulations around the use of social media means fraudsters are increasingly flourishing in this space.

Protect yourself

The scams change, but the advice on protecting yourself remains the same. If you’re approached by someone out of the blue with an exclusive investment, it should ring alarm bells. If you’re offered high returns with little or no risk, it’s probably a scam. And if at any stage you’re put under pressure or told not to tell anyone else about it, it’s a good sign that you’re being conned by a fraudster.

If you want to invest, at the very least you should check the Financial Conduct Authority’s register to make sure the person you’re dealing with is regulated. Check their web address to make sure they are who they say they are too. You can also use the FCA's warning list to see if they’re operating without the FCA’s permission.

However, the safest thing to do is to ignore these approaches and offers, and go to a regulated company yourself.

Meanwhile, if you’re approached by anyone asking for your personal details, you should assume it’s a scam. Don’t transfer money or give them any personal information. Don’t be too polite to hang up the phone or delete the text without replying. They’re relying on you to feel duty bound to listen in order to rip you off.

When you’re being set up for a social engineering scam, the best defence is to stop the conversation, hang up, and take time to think things through. Then call your bank on a number you already have for them to check if it’s legitimate. Fraudsters rely on you being caught up in the moment. The best defence is to let that moment pass and think carefully about what you’re being asked to do.

What to do if you think you’ve been scammed

Call your bank straight away – they’ll be able to help you with the next steps.

If you’ve been defrauded or experienced cybercrime you should report it to Action Fraud either online or by calling 0300 123 2040.

If you've started a pension transfer and now suspect a scam, call your pension provider straight away. They might be able to stop it.

You should also report what’s happened to the FCA either online or by calling 0800 111 6768.

If you’ve noticed any suspicious activity on your HL account or think your account might’ve been compromised, then please contact us on 0117 900 9000 as soon as possible.

Help with the emotional impact of fraud

Falling victim to fraud can have a huge emotional impact as well as being financially crippling. Victims can often feel embarrassed and don’t want to tell people what’s happened, even though they’re not to blame.

If you need to talk to someone about how you’re feeling, you can contact Victim Support either online or via their support line on 0808 168 9111. You can also contact The Samaritans at any time of the day or night on 116 123.

If a scam has left you struggling financially, you can contact Citizens Advice. You can speak to an adviser to help you find a way forward, via their Adviceline. They’re available 9am to 5pm Monday to Friday. If you live in England call 0800 144 8848. If you live in Wales call 0800 702 2020.

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