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Only 2 in 5 Know How To Spot An Investment Scam

Just two in five people (42%) think they know how to spot a fraudulent investment opportunity, according to the ScamSmart campaigns research, commissioned by the Financial Conduct Authority (FCA).

In 2016, victims of this kind of fraud lost an average of £32,000. Fraudsters employed increasingly advanced psychological tactics to persuade victims to invest. One of the most common methods used by fraudsters is to pressurise potential investors to make a quick decision on a time-limited investment offer.

Fraudsters are targeting the growing over 55 population because they are more likely to have money to invest.


Fewer than half (48%) said they would be likely to seek impartial advice before making an investment. These attitudes are seized on by fraudsters, who often urge their target to keep the offer a secret, in order to prevent others from dissuading them from investing.

Interestingly, those surveyed were more aware of certain signs of investment fraud, but less aware of others. For example, 92% agreed being contacted out of the blue could be a warning sign, but 19% were unaware that being promised returns above the market rate could also be a tactic.

The common tactics used by fraudsters include:

  • Offering lucrative returns above the market rate and downplaying the risks of the investment
  • Using flattery to make potential victims feel good, such as praising them for being a knowledgeable investor
  • Saying that the deal is only available to the target and asking them to keep it a secret
  • Saying that other clients have invested or want in on the deal (known as ‘social proof’)
  • Putting them under pressure to invest in a time-limited offer

The FCA is urging consumers to be sceptical and cautious before they invest their money. If someone invests their money with an unauthorised firm then they will have no protection from the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.

To avoid being a victim of investment fraud, the FCA advises consumers to, at the very least:

  1. Reject unsolicited contact about investments
  2. Before investing, check the Financial Services Register to see if the firm or individual you are dealing with is authorised and check the FCA Warning List of firms to avoid
  3. Get impartial advice before investing


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Cyber Aware is a cross-government campaign, funded by the National Cyber Security Programme. They aim to measurably and significantly improve the online safety behaviour and confidence of consumers and small businesses (SMEs).

Get Safe Online is the UK’s leading source of factual and easy-to-understand information on online safety. Their website offers advice on how you can protect yourself, your computers and devices, and your business against the likes of fraud, identity theft, viruses and other potential online problems.

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