If you’re over 55 and with capital you can access, there’s a good chance you’ll be on the radar of the investment scammers. Fall victim and there’s a good chance that’s the last you’ll see of your money…
Been offered a wonderful investment opportunity recently that sounds too good to be true? Then it was probably was just that: too good to be true… but spotting a fraud has never been more difficult, according to new research.
Fraud is the biggest growing crime in our society – increasingly the route taken by the modern criminal to relieve their victims of their possessions. And with the average investment fraud now an estimated £32,000, it’s potentially far more harmful to your finances than a house burglary or car theft.
The Financial Conduct Authority (FCA) is now making its voice heard – urging over 55s to thoroughly check investment opportunities are genuine before they part with their money.
This comes as new research, commissioned as part of the FCA’s Scamsmart campaign (http://scamsmart.fca.org.uk/) , reveals that only two in five (42%) think they know how to spot a fraudulent investment opportunity.
And that’s not surprising, because by its very nature, a scam can appear highly credible, added to which, fraudsters are employing increasingly advanced psychological tactics to persuade their victims to invest.
The common tactics used by fraudsters include:
- Offering lucrative returns above the market rate and downplaying the risks of the investment
- Using flattery to make potential victims feel good, such as praising them for being a knowledgeable investor
- Saying that the deal is only available to the target and asking them to keep it a secret
- Saying that other clients have invested or want in on the deal (known as ‘social proof’)
- Putting them under pressure to invest in a time-limited offer
The FCA is urging consumers to be sceptical and cautious before they invest their money. If someone invests their money with an unauthorised firm then they will have no protection from the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.
To avoid being a victim of investment fraud, the FCA advises consumers to, at the very least:
- Reject unsolicited contact about investments
- Before investing, check the Financial Services Register (https://register.fca.org.uk/) to see if the firm or individual you are dealing with is authorised and check the FCA warning list (smart.fca.org.uk/warninglist/) of firms to avoid
- Get impartial advice before investing
But, above all, make sure that the decision you make is based on thorough research of ALL your choices, not just the ones that someone is offering you, and is backed by independent expert advice. The cost might look expensive, but getting it wrong could prove even more so.
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