Investment Scams – How To Spot One And Avoid Getting Stung




Scams are sadly part and parcel of modern daily living. It’s the reason why your bank is going to great lengths to stop you from spending money from your account without checking and double checking with you that what you are doing is a legitimate transaction.

It happens all the time, and to people who think they’re switched on too! And it’s not your fault if you do get involved in a scam – these people are devious! With the online world ever-expanding and scammers getting more and more sophistocated, it’s not surprising.

So let’s talk through what a scam might look like, how you can spot one, and ultimately keep yourself as safe as you possibly can.

What Investment Scams Are Out There?

According to the FCA, data from Action Fraud shows that there has been over £197 million of reported losses from investment scams in 2018. That’s deeply shocking. They go on to say that the average loss to a person is £29,000. For some people, this is their entire life’s savings and it makes me feel sick to my core.

Apparently, the most commonly reported scams are related to investments in shares and bonds, forex and cryptocurrencies by firms that are not authorised by the FCA. They have a handy scam-checking tool that you can use if there is something you are considering so you can keep yourself safe.

How Do I Spot One?

This can be really tricky to do because scammers are getting more and more sophistocated. Websites can look legitimate, and reviews can look sound, but may well be fake. While cold calling is still a thing, we’re a lot more switched on to this than we are the online space. Often things can look legitimate and really enticing and when our emotions get involved, it’s much harder to evade.

Spotting A Scam – Video

I love this video from Alvin Hall where he is trying to spot a scam out of 3 potential options. It doesn’t take long to watch, but here are his takeaways:

  • If you don’t understand the investment, do more research first – if you still don’t understand it, or the person pushing you to invest cannot explain it in a way that you understand, then don’t put your money into it;
  • If there is a time-limitation or exclusivity to the investment “opportunity”, then it could be a scam (not always, but if you are feeling pressurised to make a decision without knowing all the facts, then it may well be a scam);
  • The investment opportunity might be appealing to your vanity by acknowledging that you are a very knowledgable investor, and “of course” you would understand what an amazing opportunity something is;
  • High returns are a red-flag. If you’re being promised “guaranteed returns”, or something that sounds too good to be true – it probably is.

The bottom line is, if you’re not sure, don’t invest, and check the company on the FCA website to see if they are regulated to sell the product that they are selling to you.

I’ve Been Scammed, What Do I Do?

First things first, try not to panic. This happens to so many people, so don’t feel stupid or beat yourself up.

The second thing to do is to reach out to the FCA and REPORT IT. You can speak to the FCA using their helpline or online contact form.

You can also go to ActionFraud and report your situation to them. Keep records of everything that happened – times/dates/who you spoke to/website links/emails and phone numbers. All of it may be important.

Even if you haven’t been scammed, but think you have spotted one, report it to the FCA or ActionFraud so that you can help to keep others safe too.

You also need to take action depending on how you paid for the investment. This which? article helps with that. Essentially, if you paid via your bank account, get in touch with your bank ASAP. They may be able to help with getting the money back, but if you ignored any warnings they gave you, you may not be able to.

What Can I Do To Protect Myself In The Future?

In addition to the scam checking tool I mentioned above, you can do the following:

  • check companies house for the company in question and look at who is running it – does it seem legitimate?;
  • you can check the FCA list of regulated firms to see if the company selling you the investment is on there and always use the details of the firm, not the contact details the company gives you to avoid “clone” firms – those that have been set up to look like a legitimate firm already out there and trading;
  • be wary of cold-calling or emails that crop up out of the blue (without you having signed up for anything);
  • hold a high level of suspicion for anything telling you that it’s a “quick” opportunity or “high yielding”/”high income” opportunity;
  • don’t part with ANY money unless you know what it’s about;
  • reach out to other people to see what they think – you can always ask in my facebook group;
  • if you feel pressurised, intimidated or made to feel stupid for asking questions, don’t get involved.

What To Do After A Scam Has Happened

Please please get support if you need it. You can access victim support online and they can help by putting you in touch with your local branch.

Reach out to your family and supportive friends, but avoid the ones who are likely to give you a “I told you so” lecture – you don’t need that. By all means come into our friendly facebook group to vent – we’ll support you through it and definitely do not judge.

If your mental health has taken a hit from this, speak to your GP for help. You may need to have counselling and your GP can definitely set something up. There is no shame in reaching out if you’re struggling.

The samaritans may also be of help to you if you just need to talk to someone.

Final Thoughts

Investing is truly an amazing and exciting thing to be involved in. But it is not a get rich quick-type thing! I bought into a property course in the past that with hindsight was promising something that was far too good to be true.

In doing so, I lost money and I have learnt my lesson. I did walk away from it with lots of additional knowledge, and while I wouldn’t necessarily call it a “scam”, it was certainly a misguided idea based on a promise of hope when I was at my most vulnerable.

Investing decisions should not be made with emotion. Learn from someone who has walked the path before and follow the rules to stay on track. And if you’re not sure, walk away.

Stay safe out there!





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