Protecting yourself from investment scams

Protecting yourself from investment scams

Victims are slowly encouraged to invest larger sums into fake portfolios. With average losses totalling around £20,000, high-net-worth and ultra-high-net-worth individuals are often the primary targets.

An estimated £612 million was lost in 2023 to investment fraud.

How investment scams work:

Fraudsters use a variety of tactics to gain trust before introducing fraudulent investment opportunities. These scams typically follow a pattern:

• Social media – With limited regulations in place on social media platforms, fraudsters use this to lure victims by presenting misinformation. These can often appear to be endorsed by well-known financial influencers.
• Building trust – The key step once contact has been made, fraudsters communicate over weeks and months to discuss potential portfolios and opportunities.  They promise that the investment opportunity they are presenting offers higher than expected rates of return with very little risk.
• Investment portals – Often the victim is given access to a fake investment portal which displays an illusion of high-yield returns. In many cases, a return on the initial investment is paid into the victim’s bank account. However, this is only in order to convince the victim to invest more.
• Crypto payments – Crypto payments are notoriously difficult to trace and recover, and as such are often used by fraudsters. Fraudsters who use this type of scam, will often encourage investments into a crypto platform rather than a more traditional investment platform for this reason.

How to stay safe

Protecting yourself from investment scams requires vigilance. Follow these key steps to stay safe:

• Research – Before any investment is made, of any value, you should research any opportunity thoroughly. In the UK, investment firms must be registered with the FCA. You can check the FCA register on their website: https://register.fca.org.uk/s/.
• Ask questions – Ask yourself the simple question: “does this sound too good to be true?”.  If the answer is “yes”, then, sadly, it is almost certainly fraud.
• Unsolicited contact – Be wary of any calls, emails or social media messages offering investment opportunities.
• Don’t be pressured into making decisions – It can often be difficult to say “no”. If you are uncertain, advise the individual that you are unable to decide there and then, perhaps using reasons such as:
  • I will not make any decision without speaking with someone first.
  • I cannot make any decision without authorisation, let me come back to you.

Fraudsters rely on building trust in many other scams. Another prevalent example in the UK are ‘Romance Scams’. For further information, please read more here. 

The criminals often use emotional manipulation to succeed. If you think you have been a victim of this type of scam, or are currently the target of such a fraud, please speak to your private banking team or Relationship Manager in the first instance and we will be pleased to provide help and advice.

You can also contact the Private Bank on +44 (0) 1933 543 600 or the Racing Bank on +44 (0) 1933 543 543.