4 Investment Scams To Spot & Avoid

Fraudulent activity is becoming more up-to-date with the trends than the latest iPhone. The adaptation that we’re seeing with online and in-person scams today is alarming, and the rate at which people are being scammed out of their hard-earned money is not something to take lightly. Everyone is vulnerable to being targeted by an investment scammer, with promises of great rewards in exchange for a chunk of your own money. The problem with scams currently is that they are seemingly convincing in the beginning, and it is often too late to get the money back once you have sent it over. 

Many experienced investors have been targeted by scammers specifically for their determination to invest in the latest things that will generate high rewards. Investment scams now can target victims in the most unexpected of forms, therefore it is important to know to see these red flags and report them before it is too late. 


How To Spot A Scam 

When it comes to initially spotting the scam, there are some key indicators to look out for. Keeping an eye out for the following behaviours might just save you from losing thousands of pounds to fraudsters:

Unsolicited Contact

All legitimate firms do not contact prospective investors unexpectedly. Cold calling and random contact over social platforms is a common way they try to find their target audience or better known as their scamming victims. This type of outreach is something you should see as a red flag, no matter how legitimate the firm seems to make itself look. Perhaps you are a[part of an investor group in which you help each other find useful opportunities. If you find yourself in conversation with an investor you do not know, make sure you have reliable sources that can prove their legitimacy.

Not FCA Registered 

The most experienced investors will be aware of the importance of FCA registration. This essentially provides evidence for a company’s legitimate registration, and also shows its reliability. You can check on the financial conduct authority’s website to see if they are registered, and if not that should be enough information to steer clear of the company. 

Promise Of High Returns

It is simple for new investors to be conned into spending their money on ‘high return’ investments that require low initial investments. You should always watch out for promises of guaranteed returns because realistically all investments offer a level of risk that can mean you lose all of your investment. It is better to know that you can make a small return from a trusted firm than to send a large chunk of money to a scammer which you will never see again. 


Scammers are likely to show signs of rushing you to make the investment and to also make you think that if you do not invest now you will be missing out on a once-in-a-lifetime opportunity. This high-pressure behaviour that scammers show is a red flag and you should immediately refrain from doing business with them. Legitimate firms would never rush you into investing, as they find 100 more valuable ones to invest in if one isn’t right for you. Do not give into the rushing sales tactic, and stop yourself before it is too late. 

So what are the scams that are taking place right now? If you are uneducated as to how scammers will try to get in contact with you, here are a few of the cunning ways you might be targeted:


Romantic Swindlers 

A lot of investors are starting to be targeted through fake profiles fraudsters are making to build romantic relationships with their targets. These are known as romantic swindlers, and you will find them on dating sites as well as social media platforms. They will target anyone that they know they can manipulate, and this can include experienced investors as well as people who just want their money to work for them. 

If you find yourself speaking to a potential romantic partner that proposes you make an investment into their business or money-generating opportunity, take this as a red flag. Also never consider sending money of any form to people online if you have never met them if you have never spoken with them over the phone and also if you have not seen their legitimate ID.


Crypto Scams 

Cryptocurrency scams have been on the rise ever since crypto has become a part of mainstream media, and multiple scammers have claimed they can generate their clients millions of pounds for. These scams often are the hardest to manage if the money is lost, as digital currency is very new and therefore hard to trace and recover. All forms of cryptocurrency are classed as high-risk investments, therefore you should never trust people who offer you a guaranteed return as there is no real guarantee.


Family And Friend Hacks

Scammers have also started targeting individuals through the use of hacking. It is easy for scammers to hack into social media platforms and to message close family and friends, asking for money for their scheme or lucrative investment. If you seem to be messaged unexpectedly by a family member asking for money, try to get in touch over the phone to confirm it is them messaging you.


Pyramid schemes 

Pyramid schemes have been around for a long time, but fraudsters have become even more clever in terms of convincing people they are investing in something legitimate. They often advise that you will be investing in a business that you will run to make you feel empowered. In reality, you will have to pay an install sign-up fee, and will only get a ‘return’ by encouraging your friends and family to sign up as well. It might look credible, but the signs of pyramid schemes are usually clear to see when it’s too late. Get a second option from family or friends, and avoid being pulled into these schemes. 


Final Thoughts

Although there are plenty of lucrative investments to be made, there are also just as many fraud investments that scammers are working hard to get people to invest in. If you are a first-time investor you should keep all the mentioned points in mind, and potentially seek the advice of experienced investors or regulated brokers. Scammers will always offer you the most attractive investments when in reality these specific schemes can be the difference between losing a large chunk of your money and avoiding any sort of mess.