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FCA: Don’t be fooled by scammers’ flattery

The regulator has released a series of warning signs for identifying investment scammers following news this morning of increasing fraud.

The signs include warning on common flattery techniques used by fraudsters to gain investors’ trust.

The FCA found victims lost an average of £29,000 to investment scams last year, while Action Fraud figures show total losses of £197m.

The FCA’s six warning signs are outlined below:

  1. Unexpected contact ​​​​– Traditionally scammers cold-call but contact can also come from online sources, for example email or social media, post, word of mouth or even in person at a seminar or exhibition.
  2. Time pressure – They might offer you a bonus or discount if you invest before a set date or say the opportunity is only available for a short period.
  3. Social proof – They may share fake reviews and claim other clients have invested or want in on the deal.
  4. Unrealistic returns – Fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere.
  5. False authority – Using convincing literature and websites, claiming to be regulated, speaking with authority on investment products.
  6. Flattery – Building a friendship with you to lull you into a false sense of security.                                                                                                                                                                                                                        Source: The FCA

Finance expert and FCA scam campaign supporter Alvin Hall says: “Regardless of how confident you are in what you’re investing, you should know who you’re investing with and the FCA warning list is a fantastic resource for smart investors to use to protect themselves.”

Scammers are also becoming increasingly difficult to spot, he adds.

The regulator warns fraudsters can make contact by email, through fake websites, and increasingly though social media channels including Facebook and Instagram.

Fifty-four per cent of people who checked the FCA’s website last year when contacted by a scammer had been reached online.

The FCA’s ScamSmart campaign website for increasing awareness around fraud saw an average 3,145 page visits in just 55 days last year.

Insolvency Service issues warning over increasing pension scams

Aegon head of pensions Kate Smith says the regulatory push to quash scams should not prevent investors from being cautious when presented with opportunities.

“Legislation to prevent cold calling will help to an extent, but investors shouldn’t be lulled into thinking they’re home and dry.

“Fraudsters have chameleon like behaviour and they’ll say and do whatever gets them what they want. It is so important people question what’s being presented to them and ultimately seek some impartial advice.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Am I alone in thinking that despite the overwhelming (over zealous) colossus of regulation especially in financial services there are more scams now than ever before?

    • And do you know why this is John ?

      The good advisers are tied up in knots wading through a bog as thick as porridge, which is the current regulatory system, while the scammers just bypass the whole lot unchallenged and fast tracked ….
      The millions that disappear to these scammers do so with such pace it makes your head spin.

  2. @John Grierson.

    You are not wrong. The continued lack of forceful action from regulators and indeed police has given scammers a sense of invulnerability to consequence that means it is a growth industry.

    Until regulators and law enforcement decide to launch an ‘untouchables’ style approach to enforcement this is unlikely to change.

  3. These warnings are all very sensible but they need to be published far more widely than just the limited realm of the FCA’s website because, if they’re not, the public aren’t going to see them unless they specifically go looking. Where they really need to be published is in newspapers, on the TV and radio and in the form of InterNet pop-ups.

    Of the 3,145 people who visited the FCA’s website, how many had already been scammed? How many of them might have given scammers a resounding Get lost had they seen or heard these warnings in the media mentioned above before being cold-called?

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