Don’t get sucked in by the savings scammers: Investment fraud is the most costly con of all | #socialmedia


Scammers have enjoyed their most lucrative year yet preying on investors, as the perfect storm of the pandemic and low-saving rates pushed millions of Britons online.

In the financial year ending April 2021, fraudsters trousered a shocking £535 million from investment cons, making them the most costly of all scams.

With 20,989 incidents reported to Action Fraud, this works out as an average loss of £25,496 per saver — and many victims are unlikely to see their money again.

Retired medical researcher Mohamed Parkar thought he would be the last person to be caught an investment scam

A survey by Hargreaves Lansdown found that 79 pc of over-55s believed they had been approached by a scammer in the past year

Despite campaigners raising the alarm about the scams for years, fraudsters continue to thrive, constantly resorting to new tricks to stay one step ahead.

There are two types of investment cons. The first involves fraudsters posing as a legitimate firm and vanishing the moment you hand over your money.

The second is where victims are flogged dodgy deals which fail to deliver the promised returns or are so high risk you stand to lose everything.

A survey by Hargreaves Lansdown found that 79 pc of over-55s believed they had been approached by a scammer in the past year.

Just as worryingly, though, the research showed that far too many people were still unaware of the telltale signs: with more than one in four saying they wouldn’t be suspicious of an investment promising guaranteed returns of 10 pc.

So what do you need to know about investment scams — and how can you keep your savings safe?

In the past, a typical con involved fraudsters dangling high returns — often as much as 10 pc per year — to lure in savers frustrated at low savings rates.

Over the years, scammers have touted everything from high-risk corporate bonds to niche investments such as wonder material graphene and holiday resorts as the ‘must have’ investment.

And, after the arrival of Bitcoin, crooks turned their attention to the cryptocurrency craze.

In 2020, savers were cheated of £113 million after being tricked into buying fake cryptocurrency investments alone.

Over the years, scammers have touted everything from high-risk corporate bonds to niche investments such as wonder material graphene and holiday resorts as the ‘must have’ investment

The promise of risk-free returns is a definite red flag, but there are other warning signs, too.

Unlike genuine investment firms, for example, fraudsters are notorious for high-pressure tactics, bombarding potential victims with intensive sales calls.

But criminals have other tricks up their sleeve, many of which give them a dangerous edge.

T here has been a sharp rise in scammers posing as reputable investment firms, using fake websites and email addresses.

By placing adverts on search engines and social media, the fraudsters can then draw in people seeking investment advice.

The scams are highly sophisticated, with crooks investing time and money in building adverts and websites that look very realistic.

And by imitating genuine investment products, rather than ‘too good to be true’ schemes, it can make cons even harder to spot.

Banking trade body UK Finance estimates that 70 pc of so-called ‘authorised frauds (where victims are tricked into transferring their money) begin with online adverts. The Financial Conduct Authority (FCA), the UK’s financial regulator, says it identified 1,200 adverts for investment scams last year.

Efforts to stop this online crime boom has led to an extended cat and mouse game, with scammers on one side, and regulators and campaigners on the other.

Campaigners, including fraud experts and consumer groups, have repeatedly called for tougher rules to force the online giants to get tougher on fraudsters.

This summer, after years of pressure, Google finally agreed to tighten its rules in the UK on who can advertise investment products in search engine results.

Under the new rules, only firms regulated by the FCA can advertise financial investment products like bonds and savings accounts.

But reformers say the scammers have managed to get around the rules by pivoting instead towards luxury goods — which aren’t treated as financial products.

Anti-scam campaigner Mark Taber, who has spoken in Parliament about fraud, says he’s seen a sudden rise in adverts pushing the chance to invest in whisky.

‘The biggest red flag for me is that the adverts are aimed at people looking for information on investment and financial advice — not for whisky,’ says Mr Taber.

Now a powerful coalition of campaigners, including Which?, the Bank of England, and the FCA are calling on the Government to intervene, making web companies liable for fraudulent adverts posted on their platforms.

In particular, the coalition wants to see online fraud included in the Government’s Online Safety Bill, which is designed to prevent online crime and abuse.

Which? has published a detailed guide to spotting potential scams, with telltale signs including being contacted out of the blue and getting high-pressure sales calls

‘Currently, the Bill fails to address fraudulent ads on online platforms, which can have such devastating financial and emotional consequences for consumers,’ says Rocio Concha, Which? director of policy.

For the time being, campaigners say, the best option is for savers to be vigilant when managing their money and investments online.

Which? has published a detailed guide to spotting potential scams, with telltale signs including being contacted out of the blue and getting high-pressure sales calls.

I invested all my life but still lost £15k 

Retired medical researcher Mohamed Parkar thought he would be the last person to be caught an investment scam.

‘I have been investing all my life and have always gone for fairly safe investment products and reputable companies,’ he says.

Mohamed, 68, from Middlesex, was looking for new investment opportunities when he spotted an advert he believed to be from investment company Vanguard. After entering his details, he received a call.

They were extremely professional on the phone,’ he says. They offered him the chance to invest £15,000 in a bond, paying 2.8 pc interest per year.

To seal the deal, the crooks, who used fake Vanguard email addresses, sent him a convincing brochure claiming the investment was FCA-regulated and backed by the Financial Services Compensation Scheme.

After sending the money and posting his signed agreement, Mohamed could not reach the agents he had spoken to. Weeks later, the real Vanguard — to which Mohamed had posted his signed form — called, warning he may have been scammed.

When he alerted his bank, they arranged to pay back £7,500 — half of what he’d lost.

When HSBC was asked why Mr Parkar wasn’t refunded in full, it said he should have carried out checks before transferring the cash, including researching the firm, verifying the email address and potentially seeking advice from a financial adviser.

A spokesman adds: ‘Remember if an offer seems too good to be true, it probably is.’

They also stress that anything that seems ‘too good to be true’ — for example, a bond paying 10 pc a year — is likely just that.

But have these toolkits kept pace with the changing online threat — and the rise of clone firms?

An FCA survey suggested that 77 pc of savers — many of whom considered themselves scam-savvy — were unaware of the problems posed by copycat websites.

It can be possible to spot clone firms by looking closely at their websites (for example, using advanced search tools to find how long they’ve been online), but this is far from easy.

If you’ve received an email, check the address extremely carefully,’ says Sarah Coles, of investment company Hargreaves Lansdown.

‘If it’s a scam, the email address may include a misspelling of the company name, or random letters or numbers.

Sometimes, they will add a word related to the industry such as “bonds” or “investments”, so it’s worth checking if it’s the right address.’

Pay careful attention, too, to the FCA’s warning list of suspected clone firms — but remember this list might not be exhaustive.

New clone websites pop up every week, and many will slip through the net before regulators notice.

Ms Coles adds that the most reliable way to check you’re not dealing with a copycat scammer is to telephone the real firm.

If they’ve contacted you by phone, hang up and call them back on a number you already have for the company, or the number on the FCA register, found at register.fca.org.uk.

‘Scammers can be pretty sophisticated and they have fake websites and fake call centres. However, they won’t ever let you call back on a number you already have for the company,’ she says. She reiterates that any unsolicited investment offers should be ignored — even if you initiate contact by giving out your phone number.

In reality, legitimate investment companies face extremely tight regulation governing how they market their products, and would be extremely unlikely to make such a call.

If you suspect you’ve already fallen for a scam, you should contact your bank immediately, as well as reporting it to the FCA and Action Fraud. Your bank will be able to investigate what has happened, and may, in some cases, be able to reimburse you (either in part or in full).

Be sure to let your bank know everything about the scam and whether there are any issues in your life that might have affected your decision-making.

Factors such as mental health difficulties, or life-changing events like bereavements, may be very relevant to the case and may strengthen the duty of care owed by your bank.

 The fraudster’s greatest prize, your pension

Fraudsters are happy to get any money they can, but one pot remains the ultimate prize: your pension.

With many people sitting on large savings — and pension freedom rules making it easier to take control of your money — scammers have identified the perfect opportunity to cash in.

Financial Conduct Authority (FCA) research reveals that, in the first six months of 2021, more than £2 million was reported lost to pension scammers, with the average loss amounting to £50,949. But anti-scam campaigner Mark Taber believes this is likely just a fraction of the true amount, with many victims unaware they’ve been cheated.

The scams are highly sophisticated, with crooks investing time and money in building adverts and websites that look very realistic

So how do these scams work and why are they so effective?

The fraudsters know savers worry whether their money will go far enough in retirement, and so they tout alternative pension investments which they claim will boost retirement income — often with returns of 8 pc per year.

Bogus advert cost me £30k

Retired medical researcher Mohamed Parkar thought he would be the last person to be caught an investment scam.

‘I have been investing all my life and have always gone for fairly safe investment products and reputable companies,’ he says.

Mohamed, 68, from Middlesex, was looking for new investment opportunities when he spotted an advert he believed to be from investment company Vanguard. After entering his details, he received a call.

They were extremely professional on the phone,’ he says. They offered him the chance to invest £15,000 in a bond, paying 2.8 pc interest per year.

To seal the deal, the crooks, who used fake Vanguard email addresses, sent him a convincing brochure claiming the investment was FCA-regulated and backed by the Financial Services Compensation Scheme.

After sending the money and posting his signed agreement, Mohamed could not reach the agents he had spoken to. Weeks later, the real Vanguard — to which Mohamed had posted his signed form — called, warning he may have been scammed.

When he alerted his bank, they arranged to pay back £7,500 — half of what he’d lost.

When HSBC was asked why Mr Parkar wasn’t refunded in full, it said he should have carried out checks before transferring the cash, including researching the firm, verifying the email address and potentially seeking advice from a financial adviser.

A spokesman adds: ‘Remember if an offer seems too good to be true, it probably is.’

 

In recent years, pension scams have focused on things such as overseas property investments, airport car parks, storage units and renewable energy bonds. While these can be dressed up to sound attractive, in reality the investments are highly risky or even fictitious.

After the arrival of the pension freedom rules in April 2015, savers reported a plague of cold calls, trying to persuade them to re-invest their pensions. Now a ban on pension cold calling, which began in 2019, has driven the crooks to look elsewhere, including by setting up online adverts.

Often scammers want to get your details to send plush brochures by post, looking like they come from reputable investment firms, then call you afterwards.

According to the Pensions Regulator, warning signs of pension scams include guarantees of high returns and complicated investment structures. Other red flags relate to the firm itself — in particular if it isn’t FCA-registered.

‘Beware of things that signal illegitimacy,’ says Myron Jobson from Interactive Investor. ‘If a firm doesn’t allow you to call back, it’s most likely because it is a fraudulent enterprise. Also, avoid firms that only list mobile phone numbers or a P.O. box address on their website.’

Pension scammers are known for offering would-be victims a free ‘pension review’, or advice on how to cash in their savings. But this isn’t always what it seems. Though such moves are possible, they often leave savers with a heavy tax bill — which scammers don’t mention.

‘Schemes offering to unlock your pension before age 55 should be avoided at all costs,’ says Mr Jobson. ‘The scammers are trying to get you to break the rules, which will likely result in huge administration and tax costs, potentially leaving you with no retirement savings.’

Charity Age UK advises anyone considering transferring their pension to take extreme caution.

As well as checking that the firm you’re dealing with is fully FCA-regulated (and isn’t a clone firm), they also suggest that savers keep seeking independent financial advice.

The government-backed Money Helper, which you can find at moneyhelper.org.uk — can give free information and advice to savers.

If you fear you’ve been caught in a pension scam, report it to Action Fraud, the UK’s national reporting centre for fraud.

Be aware, though, it’s notoriously difficult to get your money back, so take great care.



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