Several recent reports support the fact that investment frauds and scams are rising fast in the current economic climate.  Criminals involved have been quick to leverage the lockdown and adapt to new ways of targeting their victims and also to new markets. The Financial Conduct Authority (FCA) and Action Fraud reported that Forex and crypto scams had more than tripled during the lockdown. Investment fraud in 2018-19 amounted to over 27 million and new reports indicate that Investment frauds accounted for losses of £63 million. The report refers to the changing methods used by the fraudsters; in one year 5,039 victims mentioned being approached through a social media platform, with Instagram leading the way with 35.2% and Facebook close behind with 18.4% of the scams arising through their sites. There are, however, still direct approaches being made.

The City of London Police/Action Fraud pointed out that changing the method of approach also changes the type of victims pursued. Those victims targeted on social media have an average age of 19-25 years and are mainly male; whereas the victims targeted by the previous methods employed by the fraudsters are usually aged over 50.  The use of fake testimonials supported by images of a trusted well-known person to provide a bogus celebrity endorsement was mentioned to Action Fraud by over 500 victims of investment fraud.

Joanna Bailey, an associate in Giambrone's banking and finance team, who was recently interviewed by the BBC on the topic of investment scams, pointed out "the younger victims, currently being targeted by investment fraudsters, are far more likely to be influenced by bogus celebrity endorsement and far less likely to undertake thorough research into the status of the broker and platform making the approach." Joanna further mentioned "the young victims are novice investors and almost certainly unfamiliar the Forex market. The plausible fraudsters convince them of their trustworthiness and then take their savings or inheritances or even their student loans"

UK Finance, which describes itself as "the collective voice for the banking and finance industry", comments that the FCA  is cracking down on online scams by attempting to identify suspicious advertisements offering "too good to be true" investments within one day of their arrival online. One of the major difficulties is that the fraudsters are becoming highly sophisticated and are able to meticulously copy the branding of legitimate investment companies to trick people into handing over money.

The lawyers in Giambrone's highly regarded banking and financial team advise that the warning signs are often there but the novice investor simply does not know how the markets work and do not know that legitimate investment brokers are bound by rules and regulations aimed at protecting invoice investors and therefore would never employ the methods that the fraudsters use.

Our lawyers recommend the following things to look out for are:

  • An unexpected cold call, the preferred technique most used previously. This method is still used but is being eclipsed by social media contact or email.
  • Making a time-limited offer, such as a discount or bonus, coupled with heavy pressure to take up the offer very quickly.
  • Fake reviews to support the credibility of the offer.
  • Unrealistic returns on investment, the "too good to be true" return. However, increasingly a number of fraudsters are lowering the returns to appear legitimate.
  • A convincing authoritative website supported by highly professional knowledgeable literature.
  • Plausible friendly attitudes lulling the victim into a false sense of security
  • Asking for remote access to your device which then may enable them to access your banking details and steal from your bank account.

Victims of investment scams are often targeted again, after the initial attack but in a different guise, the fraudster are aware of your situation and can appear to be the solution to your problems. Giambrone's lawyers are extremely experienced in dealing with all levels of financial fraud and have a well-deserved reputation for recovery for our clients in a very challenging area of white-collar crime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.