Investment fraud

What is Investment Fraud?

Investments where fraud is commonplace are land, wine, carbon credits, gold and jewels, emerging technologies, pharmaceuticals, as well as stocks and shares. The fraudsters have sales people who call hundreds of potential victims every day, using high pressure sales techniques. The investments sold are either overvalued or do not exist.

As is the case with many investments frauds, the sales often takes place through high-pressured calls, although it can also be through mail shot, brochure distribution or websites.

To avoid becoming a victim customers are advised not to respond to investment opportunities through cold-callers – if it seems too good to be true it often is!

What to look out for

Well informed callers: Often the fraudsters will give details that one might think only a genuine investment company will have. They may have details of previous investments made, shares held, and details of personal circumstances. They will do their homework and make it their business to know as much about the victim as they can.

Cold Calls: Fraudsters will cold-call, normally by telephone, and try to sell investments that will supposedly lead to huge financial gain. In reality they either do not exist or are worthless.

Be suspicious: If you’re considering any type of investment, always remember if it seems too good to be true, then it probably is. High returns can only be achieved with high risk. If you’re suspicious about a scheme’s authenticity, you should investigate the company’s status and contact details and seek advice from an independent source.

What you can do to protect yourself

  • Fraudsters may also approach those who have already fallen victim to investment fraud and claim they can recover money. They will request an upfront fee but will not be able to recover any money.
  • Customers should be alert to the fact that a fraudster may have gone to some effort to make things appear legitimate – such as having a prestigious address, free phone number, impressive website or glossy brochure.
  • The fraudsters will often call a number of times, slowly developing a friendly relationship. If the victim responds in any way, they will persist, build trust, and eventually persuade them to part with money. Having obtained some money, they will probably call again and try to obtain further money, perhaps in a different commodity.
  • Customers should not respond to callers trying to sell investments but simply hang up the telephone.
  • Reject pressure into buying because the offer won’t be there tomorrow. Hang up and take a day or two to consider options and take independent advice.
  • Exercise considerable caution when investing money, especially in land, carbon credits, wine, jewels and stocks and shares.
  • Always seek independent financial and/or legal advice before committing to any investment.
  • Never send money to anyone you do not know.

Report an investment fraud scam

If you think you may have been approached, or are a victim of Investment Fraud, please contact Action Fraud on 0300 123 2040 for details on how to report to the authorities.

Reporting crime, including fraud, is important. If you don’t tell the authorities, how do they know it has happened and how can they do anything about it? Remember that if you are a victim of a scam or an attempted scam, however minor, there may be hundreds or even thousands of others in a similar position. Your information may form part of one big jigsaw and may be vital to completing the picture.

Useful links

Did you know

  • The majority of victims of boiler room scams are experienced investors.
  • The FCA estimates £200 million to £500 million is defrauded from victims in the UK each year.
  • The average victim of an investment scam loses £20,000 and some lose much more.