Fraud prevention – protecting yourself from investment fraud
Posted by Heath Robinson on January 6th, 2025.
Your safety and the security of your money is our highest priority, and we implement stringent safeguarding measures to protect all our customers. However, it’s also important for you to take steps to shield yourself from fraud.
To assist you in identifying potential scams and staying secure, we are publishing a series of articles focused on fraud protection. This article specifically addresses investment fraud.
What is investment fraud?
Investment fraud is when a criminal deceives someone into handing over their money by pretending to offer a profitable investment opportunity.
These scams can take many forms. Fraudsters might promote ‘get rich quick’ schemes via online or social media ads, often using fake celebrity endorsements. The investments they claim to offer might involve cryptocurrencies, foreign exchange, stocks, or bonds.
Some scammers might impersonate reputable companies, friends, or family members. Others may take a more long-term approach, building trust over time before making their move. These scams can be hard to detect as they often appear legitimate.
To make matters worse, victims of investment fraud may later face a secondary scam, where fraudsters pretend they can help recover lost money in exchange for further payment.
An example of investment fraud
Richard had been considering investing for a while but was unsure where to start.
While browsing online, he came across an ad from a celebrity endorsing an investment firm, which was also offering a sign-up bonus. The company had positive reviews online, so Richard clicked on the ad.
Shortly after, Richard received a call from an account manager who helped him set up his investment account. He even received a confirmation email, a welcome pack in the mail, and access to an online portal where he could monitor his investments.
Over the next few months, Richard’s account manager regularly contacted him with updates. They sent statements showing impressive returns and encouraged him to invest more to maximise his profits.
Then one day, Richard couldn’t log into his account. His account manager stopped responding, and the company disappeared. Richard realised too late that the ad had led him to a fake website, and he’d been transferring money to fraudsters.
Five tips on how to protect yourself
- Look out for red flags
If an investment opportunity seems too good to be true, it probably is. Be cautious if someone offers high returns with little or no risk or claims you can make large amounts of money very quickly.
Scammers often try to pressure their targets, using emotional manipulation or time-sensitive offers like bonuses or discounts. If you feel rushed or uncomfortable, take a step back and evaluate the situation carefully.
- Stay vigilant
Always approach investments with caution. Online and social media ads are common tools for fraudsters, who can create ads that look like they’re from legitimate companies. Knowing that these ads might be fake can help you spot scams.
Take your time before making any financial decisions and always err on the side of caution.
- Do your due diligence
Before committing to an investment, thoroughly research the company offering it.
Confirm that the company is a legitimate, trusted organisation with a strong track record and reliable customer service. Verify that you’re interacting with the actual company by double-checking the website and contact details. Fraudsters often create cloned websites with slightly altered URLs, such as ‘web.site.com’ instead of ‘website.com.’
If someone contacts you claiming to represent a company, confirm their identity by reaching out to the company using official contact information you’ve found independently.
- Check the FCA website
The Financial Conduct Authority (FCA) website is a valuable resource for researching investment opportunities.
You can search for companies and their registered contact information, as well as check the FCA’s Warning List, which highlights unauthorised or cloned firms.
- Get a second opinion
Discuss any potential investments with trusted family members, friends, or a qualified financial adviser.
An outside perspective can help you identify red flags you might have overlooked and ensure you make a well-informed decision.
If someone targets you
If you suspect someone is attempting to scam you through investment fraud, report it to the relevant parties immediately.
For example, report fraudulent ads on social media platforms. If someone is impersonating a legitimate company, notify that company directly.
You should also report the incident to Action Fraud, the UK’s national centre for reporting fraud and cybercrime, or the equivalent authority in your country.
If you’ve been a victim of investment fraud, be wary of secondary scams where fraudsters claim they can help recover your lost money. These are often just another tactic to steal more from victims. If you’re approached, end contact immediately.
More information on identity fraud
The FCA website is an excellent resource for verifying company details and learning about how to invest safely. It also offers ScamSmart, a tool specifically designed to help consumers spot fraudulent investments.
Action Fraud’s website provides additional guidance, tools, and advice to help you protect yourself from different types of fraud. You can also report fraud incidents directly through their platform.
If you’ve been affected by investment fraud, the independent charity Victim Support can provide free specialist help and resources.
Lastly, if you’re sending money overseas with TorFX and have any security concerns, no matter how small, reach out to us. We’re always here to help and provide reassurance for safe, secure transfers.
Finally, if you’re worried that your TorFX account may be at risk, contact us as soon as possible and we’ll be happy to help. You can also download our app, or use our online platform, to keep an eye on your transfers.
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