FCA warning as online investment scams triple
21 May 2019
Reports of cryptoassets and forex investment scams more than tripled last year, with victims losing over £27m in total in 2018/19, warns the Financial Conduct Authority (FCA) and Action Fraud
21 May 2019
The warning comes as the FCA flags the rise in the number of investment scams carried out via bogus online trading platforms.
The regulator says fraudsters often use social media to promote their ‘get rich quick’ online trading platforms. Posts often use fake celebrity endorsements and images of luxury items like expensive watches and cars. These then link to professional-looking websites where consumers are persuaded to invest.
Investors will often be led to believe that their first investment has successfully made a profit. The fraudster will then contact the victim to invest more money or introduce friends and family with the false promise of greater profits. However, eventually the returns stop, the customer account is closed and the scammer disappears with no further contact.
Action Fraud reports show that on average, victims were each scammed out of £14,600 from forex and cryptoasset scams in 2018/19. It recorded 1,834 incidents in FY 2018/19, compared to 530 the previous year.
Pauline Smith, director of Action Fraud, said: 'These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms. It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.
As part of the FCA’s ScamSmart campaign the FCA will be running advertising to raise awareness of online trading scams, with the aim of making consumers more sceptical of ‘get rich quick’ trading scams promoted online.
Mark Steward, executive director of enforcement and market oversight, FCA, said: ‘Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal. Before investing online find out how to protect yourself from scams by visiting the ScamSmart website, and if in any doubt – don’t invest.'