Investment Fraud Alert: Friends & Family Unknowingly Recruiting Victims

17 Jul 2020 10:46 AM

Investment fraud alert following reports from people falling victim to Ponzi-style schemes.

Since June 1, 2020, Action Fraud has seen an increase in reports from people falling victim to Ponzi-style schemes that were advertised to them as “investment” opportunities.

101 people fell victim to these bogus schemes as a result of being introduced to them, usually unwittingly, by a trusted friend, colleague or family member (who was later identified as a victim themselves). The total reported losses amount to £2,167,807.

A Ponzi scheme is a type of fraud where victims are lured in using the false promise of lucrative “investment” opportunities. In reality there is no investment and the money paid by victims goes straight into the pockets of criminals.

The fraudsters perpetrating the scheme will sometimes pay some of victims a little money as a way to convince them that the scheme is legitimate and to also incentivise them to recruit other victims. Most recently, the schemes have lured victims with investments including cryptocurrencies and foreign exchange trading (forex).

Fraudsters will often produce authentic-looking brochures and provide fictitious online trading accounts to investors in order to appear as though they’re a legitimate organisation. The reality is that will only keep in touch with victims via difficult to trace social media messaging platforms until the money stops being sent at which point they will sever contact or demand payments to release the initial investment.

• Seek Independent Professional Advice: Before making significant financial decisions, speak with a trusted advisor who isn’t involved with the investment; this is equally important if you’re introduced to the scheme by someone you know. Just because you know someone who has also invested does not make the opportunity legitimate!
• FCA Register: Use the Financial Conduct Authority’s (FCA) register to check if the company is regulated by the FCA. If you deal with a firm (or individual) that isn’t regulated, you may not be covered by the Financial Ombudsman Service (FOS) if things go wrong and you lose your money.

• Investment Opportunities: Don’t be rushed into making an investment. Remember, legitimate organisations will never pressure you into making a transaction on the spot.
• Investment Advice: For more information about how to invest safely, please visit: https://www.fca.org.uk/scamsmart

If you think you’ve been a victim of fraud, report it to Action Fraud online at actionfraud.police.uk or by calling 0300 123 2040.