Police and financial watchdogs are warning investors to watch out for bogus online trading platforms offering high returns from staking cash against cryptocurrency and forex deals.
The alert follows 1,850 victims losing more than £27 million in crooked investment opportunities offered over the internet in the year to the end of April 2019 – triple the number of the year before.
Victims lost an average £14,600 each to the fraudsters, who promised high rewards for investing in their schemes but delivered nothing.
But Action Fraud, the police scam report web site, explained fraudsters promoted their get rich quick schemes on social media with fake celebrity endorsements and promises of high returns that do not exist and the lure of a luxury lifestyle with pictures of fast cars, prestige homes and expensive watches.
False promises of profits
“These then link to professional-looking websites where consumers are persuaded to invest,” said Action Fraud director Pauline Smith.
“Investors will often be led to believe that their first investment has successfully made a profit.
“ The fraudster will then contact the victim to invest more money or introduce friends and family with the false promise of greater profits. However, eventually the returns stop, the customer account is closed and the scammer disappears with no further contact.”
Action Fraud and City regulator the Financial Conduct Authority want investors to check out investments before parting with any money.
Stark warning about fake investments
“These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms. It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate,” said Smith.
The message was echoed by FCA executive director of enforcement and market oversight Mark Steward.
“We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms,” he said.
“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.”