Figures released by the City of London Police show that more than £63m has been lost to investment scams, with criminals increasingly targeting victims on social media.
During a 12-month period, 5,039 reports of investment fraud made reference to a social media platform. Nearly half (44.7%) of the scams involved cryptocurrency, with Instagram the most referenced platform (35.2%), followed by Facebook (18.4%).
The City of London Police says the use of social media by criminals is helping to buck the trend for typical investment fraud victims, with under 30s now being most affected.
Specifically, 27.5% of all investment fraud victims who mentioned social media in their report were aged 19 to 25, and 61% were men. By contrast, when looking at investment fraud reports where social media didn’t play a factor in the scam, the average age of victims was over 50.
Bogus celebrity endorsements
Action Fraud says criminals are using social media influencers to carry out their scams, exploiting the brand image and reputation of well-known individuals without their knowledge, and advertising bogus celebrity endorsements.
Fraudsters typically present professional and credible looking online adverts, send emails, and create websites to advertise fake investment opportunities in cryptocurrency, foreign exchange trading and bonds. Often, fake testimonials are accompanied with a picture of a well-known figure to help the investment seem legitimate.
Between April 2020 and March 2021, Action Fraud received more than 500 investment fraud reports which made reference to a bogus celebrity endorsement, with losses reaching more than £10m.
Cloned investment firms
Another common trend seen is cloned company investment fraud, where criminals will copy the branding of legitimate investment companies to trick people into handing over money.
A recent report identified that 8% of all cloned company fraud victims had initiated contact with the suspect following a direct approach, or after seeing an advert, on a social media platform. Whilst the average victim age for cloned company fraud overall was found to be 60 years, this nearly halved amongst those who referenced a social media platform in their report.
The scam epidemic
Superintendent Sanjay Andersen, from the City of London Police’s National Fraud Intelligence Bureau, said: “Reports of investment fraud have increased significantly since the start of the coronavirus pandemic, which is unsurprising when you think the vast majority of us have had to conduct nearly every aspect of our lives on a computer or mobile phone.
“Being online more means criminals have a greater opportunity to approach unsuspecting victims with their scams. We would encourage anyone thinking about making an investment to do their research first. Visit the FCA’s website and check and double check every detail before handing over your money or personal details.”
Myron Jobson, personal finance campaigner at Interactive Investor, said: “Social media has unwittingly become a breeding ground for dastardly investment scams. These scams feed on the FOMO (fear of missing out) culture that is rife on social media platforms, luring users in with phoney ‘too good to be true’ investment opportunities amid posts showing users living their ‘best life’. However, these scams have a devastating consequences on victims, both financially and emotionally.
“There is an epidemic of financial scams in the UK which has been exacerbated over the past year by the pandemic, with fraudsters taking advantage of the Covid tumult to hide their nefarious schemes. We all have to be on the lookout for this, and social media firms have a big role to play to weed out scam adverts on their platforms.”