Financial Scamming and Fraud

Investment Scams
Victims of investment scams are sold overvalued or nonexistent investments with promises of high
returns with low to no risk. Every year in the UK, an estimated £1.2bn is lost to investment fraud.
It is generally accepted that only 10% of all crimes are reported; this means the number of people
affected by investment scams is likely to be much higher.
The investments sold by the scammers are very diverse. For example, overseas holiday properties,
forest land, wind turbines, rare or precious commodities such as diamonds that will only increase in
value due to their scarcity. They can be sold to members of the public as part of a plan to improve
a pension by direct telephone sales, or by taking advantage of less regulated investment markets.
These will be schemes unregulated by the FCA. Fraudsters will also try to add credibility to their
approach and they may use a firm of solicitors to give the impression of legitimacy to the investment.
If an individual is of pensionable age or in a position to invest substantial savings, they may be
targeted with the use of high-pressure sales tactics or fall victim to misleading promotional
statements and material. Often the fraudster builds a rapport over several weeks or months and
many see the fraudster as a trusted friend before the high-pressure sales tactics are used.
Figures released in
October 2016 by Action
Fraud and the City of
London Police show that
over 77 per cent of all
individuals reporting
investment fraud are men
with the average age of
65. Their average loss is
over £32,000, with most
living in metropolitan
areas.
Individuals reporting investment fraud
77%
Male
Average
loss
£32,000
Average
age
65 years
Living in
metropolitan
areas
Source: Action Fraud and City of London Police 2016
Advice from consumer bodies is to never enter
into an agreement as the result of a cold call
or unsolicited mail. If an individual has
lost money from a scam, they may find
themselves once again a target. The
scam will see an upfront fee requested,
a scenario that is known as a recovery
room scam.
The Financial Conduct Authority (FCA)
advises consumers to reject all unsolicited
contact about investments and to check
the FCA Register and Warning List before
investing.