The risks of trusting a recommendation of a celebrity regarding investment opportunities has been highlighted yet again by the Daily Mail and the Sun revealing that a fraudulent Forex trader allegedly called Josh Chandler paid Katie Price to promote a scam Forex scheme to her followers on Instagram. Unwittingly Katie Price promoted the fraudulent scheme to her 2.6 million Instagram followers on at least two occasions; a large number will not have any experience of financial investment in the Forex market and will have been encouraged into the scheme with little or no knowledge of how Forex investment operates and the potential risks.
Giambrone & Partners banking and litigation team have considerable experience in assisting victims of investment fraud and report that fraudulent investment brokers are using online platforms and celebrity affiliate marketing to encourage individuals into fake investment schemes far more frequently during the recent lockdown.
Joanna Bailey, an associate, commented "the Forex investment market is volatile and should not be entered into by novice investors with no grasp of the risks they are taking with their money" Joanna further remarked, "the celebrities who promote such schemes often also have no experience of trading in the Forex market and do not realise the fraudulent nature of the schemes they are promoting and run the risk of being drawn into a situation that they did not anticipate."
A large number of Katie Price's followers have lost money as they took her endorsement as a sign that the scheme was sound. Recovering money lost in such schemes can be a difficult and long drawn-out process. Giambrone & Partners lawyers have developed a number of strategies aimed at assisting victims of investment fraud to recover their lost funds. Each situation presents a separate set of circumstances and our lawyers are able to draw on their extensive experience to assist our clients.
Katie Price was not alone in promoting the fraudulent scheme, Nicole O'Brien, known for her appearance on the Netflix reality programme Too Hot to Handle, has also promoted the fraudulent scam to her Instagram followers. The Advertising Standards Authority rules require sponsored content on Instagram to be highlighted to followers with a hashtag clarifying that the celebrity is being paid. Not all celebrity affiliates do this when promoting a third party's products.
Most of the money is lost online and the government's National Cyber Security Centre battles to take down hundreds of websites promoting financial fraud as they arise. The protections that should be available to victims of fraud are being whittled down, Action Fraud is being disbanded due to its ineffectiveness and the failure to actively pursue fraudsters.
Also, as Giambrone & Partners pointed out previously, the Online Safety Bill has omitted to include sanctions against online paid-for advertising that promote financial fraud. Financial fraud is a leading crime across the UK with the investment industry guessing that the true figure lost to financial fraud is closer to £4 billion.
Victims are left with little choice but to take action themselves. Joanna Bailey and her team have had considerable success in recovering money lost to investment by mounting class actions against the rogue investment brokers. A class action, by virtue of the numbers of victims involved, clearly demonstrates to a court that fraud has repeatedly taken place, rather than simply an unlucky poor investment. It also reduces the costs involved.
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