A Lloyds bank customer recently lost £60,000 in a cryptocurrency scam.
What can you learn from his unfortunate experience?
Is the investment being endorsed by a celebrity or influencer on social media?
This is a common tactic to grab your attention and make you believe an investment is genuine – footballers, athletes, singers, TV presenters and prominent businesspeople have all been targeted. Money Saving Expert Martin Lewis is particularly vocal about scammers, and his actions have resulted in Facebook launching a new tool to help users flag fake ads more easily and quickly, and in Citizens Advice launching Scams Action, providing help for consumers who are worried they are being scammed.
TOP TIP: Take time to do your research and discover if the person in question has any legitimate connection with the company offering the investment.
Did you click on a link and fill in your contact details?
Often, these contact forms are a phishing exercise, designed to collect people’s contact details, which might be sold on or used by scammers at a later date. Online adverts might appear to relate to a genuine investment company, but have you checked if the firm has been cloned? You may be the target of an impersonation scam, where fraudsters are pretending to be another person or business, in order to gain your trust. City watchdog, the Financial Conduct Authority (FCA) website includes the Financial Services Register, where you can search for firms and individuals and the activities they have permissions for. Only use the contact details listed on the FCA Register, so you can be sure you are sending your information to the right place.
TOP TIP: The FCA is an independent body set up to oversee how financial services firms operate. They publish details of cloned firms and offer guidance on how to protect yourself from becoming the victim of fraud. Check out their list of unauthorised firms.
Did a so-called investment manager call you soon afterwards? Did they seem very knowledgeable?
It is easy to assume that the person calling is a genuine investment manager. But, if you entered your details into an online contact form, without checking where that form would end up, how can you be so sure? Are you talking to a scammer? Once the person has your attention on the phone, they may use facts and figures and persuasive language, leading you to believe they are genuine. Through well-versed sales techniques, they may start to apply pressure on you to invest, saying an offer is time-limited or is only available to a small number of people and should not be shared with friends or family.
TOP TIP: Never feel under pressure to invest. A genuine financial advisor would not operate in this way. Hang up the telephone and take time to think. Could they be selling fake cryptocurrency? Is the investment right for you? Seek advice from an Independent Financial Advisor if necessary.
Were you encouraged to start investing with a relatively small sum of money?
It doesn’t seem as risky if you ‘only’ invest a few pounds at first, right? If the investment fails, no real loss, but if it increases, then it must be worth investing more into. Not necessarily! Again, this is a common tactic used by fraudsters, designed to lure you in. Investments like cryptocurrency can be high-risk and volatile, so may not be suitable for the majority of people.
TOP TIP: Do your homework! Look at how cryptocurrency funds have performed over a period of several years. Do you understand and are you comfortable with the level of risk involved? If not, other investments might be more appropriate.
Did you share personal identification documents, such as your passport, driving licence or bank details?
While you often have to prove your identity to transact with genuine businesses such as banks and financial advisers, it is worth remembering that there are risks to sharing your personal identification documents. Should your details fall into the hands of scammers, or they get remote access to your computer, this is all they need to apply for loans or overdrafts in your name. This is identity theft.
TOP TIP: The Information Commissioner’s Office (ICO) lists a number of signs to look out for and ways to reduce the risk of identity theft. If you have been the victim of identity theft, you should report it to CIFAS, the UK’s Fraud Prevention Service.
Were you given access to an online trading account, showing your investment had increased in value
Financial fraudsters often set up genuine online accounts and initially give you access. But, at any time, they can change the login details, effectively locking you out of your own account. They control access to the account, as well as how much money remains in it.
TOP TIP: The only way you can keep control of an online account, and the money in it, is to be the only person who knows the username and password. Set up two-factor authentication, which adds an extra layer of security.
Did your investment manager call back to encourage you to invest more money, this time a much bigger sum? Were you persuaded to dip into your savings, overdraft or take out loans to meet their demands?
If you’ve invested a small amount and seen it go up in value, there may be a temptation to invest more. And the persuasive techniques used by your ‘investment manager’ could have you reaching for your bank details once again. Read the small print relating to any investment and it will always say ‘The value of investments may go down as well as up.’ Can you afford to dip into savings and risk losing money? If you take out a loan in order to invest the money, will the gains made on the investment cover the interest due on the loan? And what happens if the investment value falls? Can you still afford to meet the loan repayments?
TOP TIP: Ensuring that you understand risk is something genuine financial advisers take very seriously. They take time to explain what the level of risk is for an investment and to make sure that you are comfortable with the reality of losing a percentage of your initial outlay, should the investment perform poorly. Be certain that you have all the facts, before investing large amounts of money, particularly if it involves using overdrafts or loans.
When you tried to withdraw your investment, were you prevented from doing so? When you next logged into your account, was the money all gone?
Some investors have been prevented from withdrawing their money, being told there is a tax bill to pay first, or that the money hasn’t performed as well as expected. Others have logged into their online account, only to see the balance is zero and all their money has been withdrawn.
TOP TIP: Notify the police and Action Fraud. Contact your bank, too. Give them details of what the scammer told you about the investment, why you thought it was legitimate when you realised it was a scam, and all the contact details and bank account details you have relating to the scammer/investment.
The money and the scammers have disappeared, the police and bank are unable to help – what next?
If the police have been unable to trace the fraudsters or your money, and your bank is unwilling to refund your losses, it may still be possible to make a claim for compensation through the Financial Ombudsman Service (FOS). FOS is the Government-backed organisation responsible for sorting out complaints between financial businesses and their customers. You can ask them to carry out an investigation into how your bank handled your complaint and their duty is to determine what would be fair and reasonable in all the circumstances of the case.
TOP TIP: While it is possible to take a case to FOS yourself, our team of specialist APP Fraud lawyers have many years of experience dealing with FOS and their claims and appeals processes. We know the time limits to be followed and understand the complex legal arguments that can arise. We will assess your case and decide whether to bring your claim to FOS. If we do, we work on a ‘no win, no fee’ basis, meaning that you do not pay us anything if your claim is unsuccessful.
Sarah Spruce, Head of the APP fraud team at TLW Solicitors comments:
“No one wants to experience this: the point in time when you realise something is wrong and you have likely become the victim of an investment scam. You may feel distraught, tricked or embarrassed, but you need to seek help quickly.”
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