The Financial Conduct Authority and Action Fraud have issued a new warning over trading scams promoted online.

Action Fraud and The Financial Conduct Authority have reported a sharp rise in investment scams. The warning comes after a series of investment scams carried out via bogus online trading platforms during 2018/19 have cost victims a total of £27 million. The scams involve crypto assets and forex investments and people are lured in with the promise of high returns. Action Fraud say the amount of cases that have been reported has tripled to over 1,800.

Fraudsters are using social media to promote online trading platforms. Posts lure people in with fake celebrity endorsements and luxury items such as expensive watches and cars. When people click on the links they are directed to professional looking websites, the websites are designed to persuade victims into investing. Investors are tricked into thinking that their first investment had made a profit. The fraudster then calls their victim and persuades them to invest more money or to introduce friends and family. Eventually the scammer will stop returning any money, the customer account closes and the fraudster disappears without contact. Action Fraud reports show that on average, victims were each scammed out of £14,600 from forex and crypto scams.

Raising awareness 

As part of the FCA’s ScamSmart campaign the FCA will be running advertising to raise awareness of online trading scams. Running on social media, the ScamSmart adverts aim to make consumers more sceptical of ‘get rich quick’ trading scams promoted online. Supported by the City of London Police, the FCA’s ScamSmart campaign encourages those considering an investment to check its dedicated website for tips on how to avoid investment fraud,

Director of Action Fraud, Pauline Smith, 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. Action Fraud is pleased to be partnering with the FCA to raise awareness of online trading scams, and we hope it will help prevent more people falling victim. Remember, if you think you have been a victim, contact Action Fraud” 

Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said: “We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms. 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.” 

Action Frauds recommend the following ways to stay safe when scrolling:

Don’t assume it’s real – professional-looking websites, adverts or social media posts don’t always mean that an investment opportunity is genuine. Criminals can use the names of well-known brands or individuals to make their scams appear legitimate.

Stay in control – avoid uninvited investment offers whether made on social media or over the phone. If you’re thinking about making an investment, thoroughly research the company first and consider getting independent advice.

Make the right checks – Firms providing regulated financial services must be authorised by the FCA. You can check whether they are authorised on the FCA’s Register. Use the contact details on the Register, not the details the firm gives you, to avoid ‘clones’.

Every report matters – If you have been a victim of fraud or cyber-crime, report it to Action Fraud.