Beware the latest investment scams

Beware the latest investment scams. A host of investment bond websites have been red-flagged by the City regulator in the latest round of scam warnings – writes Holly Thomas.

These websites have been offering products and services without authorisation from the Financial Conduct Authority (FCA), which is urging investors to steer clear.

Companies including Top Bond Invest, Comparebondrates.com, Invest Property Bonds, bonds-invest.com and UK Premier Bonds were named in the warnings issued this month. They all offer a similar opportunity for investors to earn eye-catching returns of as much as 9% via bonds offered and backed by big bank brands.

In reality these bonds often don’t exist and fraudsters simply pocket the investment made and stop returning calls and emails. Recovering money can be very difficult.

For each of the firms the FCA published a separate warning note, stating: ‘Some firms act without our authorisation and some knowingly run investment scams. This firm is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorisation.’

Falling for an investment scam usually means big losses. Action Fraud’s latest report published in January recorded that victims lost an average of more than £45,000 last year.

There are broadly three scenarios under which you will be offered a dodgy investment. The first could be a totally fictitious investment that doesn’t exist. In other cases, the investment does exist, but the scammer takes the money instead of putting it in the opportunity. Lastly, the scammer might pretend they are representing a legitimate and trusted investment group.

Social media evils

There are plenty of investment scams in circulation that are increasingly offered through social media. The likes of Facebook, Instagram, Twitter and TikTok provide criminals with an ideal platform to showcase fake schemes and lure people in.

They can advertise made-up investments in cryptocurrencies, property or bonds, for example. The scammers often have convincing social media profiles or websites with bogus reviews, sometimes using fake celebrity endorsements.

Worryingly, a new study claims that one in 10 investors used social media to inform their investment decisions in 2020 as Covid prompted more people to turn online for contact — and even financial insight.

The report by behavioural finance firm Oxford Risk said novice investors with more time on their hands due during lockdowns are using social media platforms as a key source of information.

Younger people could be more at risk of falling victim via social media channels. The report said a fifth of younger investors cited social media channels as the most important sources of information for managing their investments, compared with just 4% of those over the age of 35.

Know the warning signs and stay safe

It is up to individuals to be aware of the warning signs that an investment opportunity is a scam. The five main signs are:

1) You are contacted out of the blue

An investment offered via a cold call, text, message on social media, email or brochure is highly likely to be a scam.

2) You are rushed into making a decision

A genuine investment opportunity should never come with any pressure. If you are presented with a limited time offer, bonus or discount if you sign up before a deadline, walk away.

3) They are not registered with the FCA

Always check to see if a firm is registered with the FCA at https://register.fca.org.uk/s/. There is also a scam warning list where you can check if you’re dealing with a known fraudster at https://www.fca.org.uk/scamsmart.

If you’re in any doubt, ask a financial adviser. It might be worth their advice fee whatever the outcome.

4) They say it’s risk-free

Anyone who claims an investment is risk-free is undoubtedly lying. Risk is part and parcel of investing.

5) It sounds too good to be true

Offering returns of 9% sound dreamy in a low interest rate environment as we have today – but alarm bells should ring if returns at this level are promised.

If you have been approached by an unauthorised firm you can contact the FCA’s consumer helpline on 0800 111 6768 to report it. If you have been a victim of fraud, report it to Action Fraud at https://reporting.actionfraud.police.uk/login or by calling 0300 123 2040.

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