Crypto Investment Scams Are on the Rise – Here’s How to Protect Yourself
Reports of investment scams tripled last year while victims lost on average more than £14,000. Here’s how you can avoid falling prey to fraudsters.
The warning comes as cryptoassests and forex investment scam reports tripled last year to more than 1,800, resulting in victims losing more than £27 million.
On average, scam victims lost around £14,600 with many seemingly lured by promises of prompt, lucrative investment returns through bogus trading platforms.
Fraudsters often take advantage of social media to promote these ‘get rich quick’ online platforms, Action Fraud said. These websites regularly feature fake celebrity endorsements of crypto trading and showcase luxury consumer items, such as expensive watches and supercars.
Victims are then led to professional-looking websites where they are persuaded to invest and, ultimately, scammed.
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“Investors will often be led to believe that their first investment has successfully made a profit,” Action Fraud said in a statement. “The fraudsters will then contact the victims to invest more money or introduce friends and family with the false promise of greater profits.”
Eventually, however, the return on investments stop. Customer accounts are closed and the scammer(s) disappear with no further contact.
Pauline Smith, director of Action Fraud, said the newly released figures should stand as a warning to consumers who may fall victim when investing in cryptocurrency.
“These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms,” Smith said. “It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.”
Gareth Shaw, head of money at consumer watchdog Which?, said that while scams are on the rise, victims have little chance of justice. Fewer than one in 20 scam cases reported to Action Fraud are solved, research shows.
Shaw said: “In order to fight this worsening crime, a more joined-up approach is needed from the government, police and businesses who services are exploited by fraudsters to prevent people from being scammed in the first place – and to act fast to recover their money when the worst happens.
“The banking industry must urgently step up its preparations to introduce confirmation of payee name checks, which could cut bank transfer fraud in half overnight.”
The FCA is working alongside Action Fraud as part of the ScamSmart campaign, which aims to raise awareness of online trading scams.
A social media campaign conducted by the authority will recommend consumers view such platforms with scepticism and encourage them to check its dedicated website for tips on how to avoid investment fraud.
Mark Steward, executive director of Enforcement and Market Oversight at the FCA, said: “We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms.
“Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal. Before investing online find out how to protect yourself from scams by visiting the ScamSmart website, and if in any doubt – don’t invest.”
How to Spot (and avoid) Crypto Scams
There are several ways through which consumers can keep their money safe from cryptocurrency scammers, according to the FCA.
Remain Sceptical: The authority recommends that prospective investors should never assume the website or platform they’re using is real. Even if the website appears professional or if an advert circulated on social media has caught your eye, never assume the investment is legitimate.
Always do your research: If you are thinking of investing in cryptocurrency with a particular platform, the FCA recommends you always research properly.
When speaking to a representative over the phone, tell them to call you back and take your time to look into the company’s past and not base your trust solely on a Google search result.
Consumers can also check the FCA’s warning list to see if it’s a potential scam website.
Make the right checks: Companies providing regulated financial services must be authorised by the FCA, which means you can check whether they are authorised on the authority’s Register.
Always use the contact details featured on the register and not the details the company gives to you. Doing this will help you to avoid ‘clones’ and could be the difference between making a successful investment and falling prey to fraudsters.
If you do encounter an investment scam the FCA insists you should report it, which could help prevent other consumers from falling victim.