Avoiding financial scams

Financial fraud is sadly widespread. Rarely a day goes by without a mention of the latest scam in the news, or talk about unsolicited phone calls targeting vulnerable members of the local community.

These financial scams can take a number of different forms.

There’s the authorised push payment scam, where banking customers are tricked into moving money into an account controlled by the criminal.

Or courier card fraud, which involves the scammer sending a courier to collect your bank card and PIN number, which you hand over in the belief you are helping to prevent a crime.

Criminals create fake but very convincing investment companies – tricking people into thinking they are investing their money when it’s actually being stolen from them. They often call you out of the blue or advertise on social media – offering great investment opportunities that seem completely genuine.

These fraudsters can make lots of money with this type of scam, so they make the story as believable as possible: creating fake reviews, literature and brochures.

Companies are faked so well, it makes it difficult to identify a fraudulent company from a real one. The most common types of investment scams that people have become a victim of include cryptocurrency (i.e. Bitcoin), foreign exchange, bonds, shares and early pension release.

While not technically a scam, there are also several forms of investments which we consider to be such high-risk that you are very likely to lose your money. These investments sit outside of UK financial services regulation, which means you have no recourse to the Financial Services Compensation Scheme (FSCS), when things inevitably go wrong.

Cases that we have come across in recent years have involved investments in Offshore Property Bonds and also Storage Pods. In both instances, the brochures were very glossy, with high-quality photography and convincing words. The salesman promised returns of 10-15% a year, which compared with the return investors were currently receiving or the low interest on cash savings, was very appealing.

When we looked at what had taken place in each instance, we raised our concerns with the regulator, the Financial Conduct Authority (FCA).

Storage pod schemes and other exotic investments might not be a scam, but they are extremely high risk and in the cases we have come across have ended with the investment companies becoming insolvent.

Anything offering such high returns must be treated with a healthy degree of scepticism. The litmus test being, if it’s too good to be true, it usually is. Apply this rule to any investment or financial offer, and you are usually kept from harm.

There are several steps you should take to stay safe from scams.

Be aware

Your bank will never ask you to move money to another account. Bank accounts can be blocked to instantly stop any transactions – so there is no need to transfer your money to another account.

What to look out for

-If you’re being offered high returns and interest rates – take a moment to think about it. If it seems too good to be true it probably is.

-Sometimes a genuine investment company can be cloned. If you’re making any investments it’s always best to speak to your Financial Adviser or check the FCA investment scam list at  www.fca.org.uk/scamsmart/warning-list for all known cloned firms.

-If a company contacts you out of the blue, via phone, email or text and puts pressure on you to make a decision quickly it’s likely to be fraudster. Genuine investment firms will give you time to think things over.

-Investment scammers sometimes advertise their services on social media and wait for you to contact them.

What to do to be sure   

-If someone calls you out of the blue asking you to invest money, just hang up. Wait for at least 10 minutes before making another call as fraudsters can keep the line open. Alternatively, use a different phone. Remember, nobody ever lost money by hanging up on a cold caller.

-Check the FCA investment scam list to see if that company has been cloned by fraudsters. You can also call the number the FCA have listed from a different phone to check it’s the same company. http://scamsmart.fca.org.uk/

-Always get independent investment advice from an FCA-regulated firm.

-If you believe you’ve accidentally shared any of your details, get in touch with your bank. Remember it’s best to use a different phone or wait at least 10 minutes in case the fraudster has kept the line open.

Please stay safe out there and remember you can always speak to one of our Financial Planner if you would like a second opinion.