How to recognise and avoid investment fraud
Investment fraud – sometimes referred to as boiler room fraud – can come in many forms, but the common feature is the promise of a high return.
Fraudsters, posing as salespeople, contact unsuspecting individuals and offer them seemingly exciting investment opportunities, such as shares, plots of land, carbon credits, wine, gold and other jewels. However, the investment turns out be worthless, impossible to sell or just non-existent.
What are the warning signs?
Cold calls: If you have been approached out of the blue, be on your guard.
Too good to be true: Fraudsters try to tempt victims with fantastic deals. If it sounds too good to be true, it probably is.
Persistent tone and sense of urgency: Fraudsters will often try to convince their victims that they need to move quickly or they will miss out on a great opportunity.
Who are the victims?
These scams are not limited to novice investors. Victims of investment fraud come from a variety of backgrounds and it is quite often experienced investors who are being conned. The fraudsters are skilled at convincing people that the investment is real and it can be hard to tell them apart from genuine investment opportunities.
The FSA estimate that boiler room scams cost investors more than £200m each year, with the average loss to a victim of these types of scams being around £20,000.
What should I do if I suspect I am being approached about a fraudulent investment?
- Check whether the broker is authorised by the FSA. FSA authorisation is a legal requirement in order to deal in or arrange investments. A broker's details can be checked on the FSA’s website.
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Do some background research on the broker or the person making you the offer. Do they have a proven track record that can be verified by an independent party? Are they a member of a trade association? Where are they based? Be wary of those based overseas – this is a common indicator of fraud.
Don't just trust a flashy website as evidence of quality. Fraudsters have been known to hijack reputable companies' names and websites. You can check whether the company is registered at Companies House and whether the details held there match those you have been given.
Remember, The devil's in their details and it pays to check who you are dealing with before investing.
- Don't be pressured into buying shares, goods or land and don't send money unless you are confident about who you are sending it to and are sure you understand the risks.
- Get independent advice. Call the FSA's consumer helpline on 0845 606 1234 – they can provide general guidance and they also hold a list of all known current boiler room and landbanking fraud schemes.
Further information
To learn more about investment fraud and how to protect yourself from scams, visit the FSA and Action Fraud websites. The Little Book of Big Scams published by the Metropolitan Police also contains information about different scams.
What should I do if I’ve fallen victim to investment fraud?
If you think you are or may be a victim of investment fraud, you should report it immediately to Action Fraud, either by calling 0300 123 2040 or online at www.actionfraud.police.uk .
Unfortunately, in the majority of cases, Barclays will not be able to recover the funds for you if you have paid money away to a scam. However, we do take all cases seriously and our staff will be happy to take the details of your case. The information will be used to support our continued efforts to combat investment fraud and help protect you and others from falling victim to such scams.
