Financially squeezed Brits risk falling victim to investment scams as they are lured by too-good-to be-true returns and get-rich-quick schemes, reveals research from Nationwide Building Society.
Britain’s biggest building society is urging any members who are even remotely concerned or doubtful about an investment opportunity to use the Society’s Scam Checker Service, which is available in branch or by calling a 24/7 freephone number (0800 030 4057). If the payment goes ahead and the member is subsequently scammed, unless Nationwide told the member not to proceed, they will be fully reimbursed.
Households up and down the country are feeling the pressure from the rising cost of living, leading to just under a quarter (24%) of those surveyed saying they would be willing1 to take more risks to make money.
The poll of over 3,000 people2 highlights more than six in ten (61%)3 would agree to an investment promising to double their money in a year, with eight per cent agreeing to invest straight away without doing any of their own research to avoid missing out.
Nationwide’s internal data shows that in 2022, investment scams accounted for 36 per cent of all scam cases with an average claim of £4,919. When it comes to different age groups, those aged 65 plus accounted for 25 per cent of the total number of investment scams reported in 2022 (down from 35% in 2021), whereas reports of investment scams from 25 to 34s accounted for 16 per cent of the total investment scam reports in 2022 (up from 12 per cent in 2021).
Those in the South East were the most likely to be scammed, with Kent (6%), London (6%) and Essex (5%) taking the top three spots, closely followed by the West Midlands (5%), Middlesex (4%), Lancashire (4%) and Hampshire (3%)4.
On average, according to the poll, people have £18,504 to invest, although more than one in six (16%) say they would be willing to borrow money to invest, with 38 per cent of those who would borrow money doing so from friends and family.
For those with some money to invest, the top things they would invest in are property (35%), stocks and shares (34%), investment ISAs (28%), gold (24%), bonds and gilts (17%) and cryptocurrency (17%). When searching for a new investment, more than one in three (35%) would go to the website of a company they know, 32 per cent would use a search engine, 24 per cent would find an investment adviser online, while many would turn to social media (Facebook: 10%; Instagram: 9%; and TikTok: 9%).
While investing can be an effective and trusted way of growing finances, it is a focus for opportunistic criminals using sophisticated techniques to trick people into believing they are dealing with an adviser offering a real opportunity. This includes cloning websites of genuine companies and convincingly appearing to be a legitimate investment advisor. Due to the longer-term nature of investing, it can be weeks and sometimes months or even years before people realise they have fallen victim to a scam, with criminals commonly paying false dividends to make their victims believe their investment is growing.
Jim Winters, Director of Economic Crime at Nationwide Building Society said: “The lure of big returns can be very tempting, but if people aren’t careful, they can lose life-changing amounts to an investment scam. At a time when many are experiencing financial pressures, we are seeing an increase in these types of crime – both in terms of volume and the amount lost. These types of scams can often be quite sophisticated, as the fraudsters may have created websites and paperwork to help convince people the investment is genuine. To make their investment stand out, the returns are often higher than on real investments, so if it looks too good to be true, it probably is. This is why we are urging members who might have the merest hint of reservations about the validity of an investment opportunity to get in touch with us on our dedicated Scam Checker Service.”
The warning signs that someone may have been contacted about an investment scam are:
- Unexpected contact: In the past, scammers cold-called. Now, they might contact you online. This might be by email or social media. They may also contact you by post, or even in person at a seminar or exhibition.
- Time pressure: Scammers might offer a bonus or discount if you invest before a set date. Or they might tell you the offer is only available for a short period.
- Social proof: The fraudster may share fake reviews. They might claim other clients have invested or want access to the deal.
- Unrealistic returns: Fraudsters often promise tempting returns that sound too good to be true. For example, much better interest rates than elsewhere.
- False authority: They might use convincing documents and websites, claim to be regulated and speak with authority on investment products.
- Flattery: They may try to build a friendship with you to lull you into a false sense of security.
The three top tips to help protect people from investment scams are:
- Check that the firm is authorised by the Financial Conduct Authority (FCA): This can be done by using the register on the FCA website.
- Check that it isn’t a ‘cloned company’: Fraudsters can pretend to be a genuine firm. Check for any other websites under the same name.
- Make sure you use contact details taken from the FCA’s register: Do not use the details given to you directly from the company, or by the person who contacted you.
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