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23 Mar 2020

What you need to know about investment scams during the coronavirus crisis

Simon Hamm

Simon Hamm | Fraud risk and future strategy manager

Criminals are impersonating brands you know and engage with and committing fraud 

We recently issued advice on how to avoid becoming a victim of fraud during the coronavirus crisis.

In particular, investment scams are increasingly common. 


As global interest rates drop in the wake of the coronavirus emergency, many people will be looking for new investment opportunities and financial products. However, criminals are using these turbulent times to target individuals with fake investment scams. They will offer attractive – and fictional – deals to encourage you to invest before taking your money. 


There are two main ways for fake investment scams to be promoted. The first is through cold-calls or unsolicited emails – an unrequested investment opportunity can often be a scam. In these communications criminals may pretend to represent an established wealth management company, but will ask that you only contact them on a personal email address or number.


Secondly, individuals searching for new product offerings online can land on fake websites that are often hard to distinguish from genuine ones. The websites will often display only one type of product promising a high return and ask you to leave your contact details to receive an investment brochure. Fraudsters can impersonate a well-known brand or company and claim that they work for a trusted financial organisation by including the names of genuine employees to try to enhance authenticity of their correspondence and the investment.


In either case, people can be told that an offer is only available for a short period of time. Individuals may be sent documentation that appears legitimate and are even asked for a passport and proof of address to verify their identity. These processes may appear genuine, but they are simply elaborate efforts by the fraudsters to gain their victims’ trust.


Once a victim transfers funds over, the money and the contact will disappear.


At this time, please stay vigilant with your investments. Take your time to research an opportunity before making any kind of financial decision and ensure you conduct the same due diligence whether you’re investing by paying through bank transfer or by using your debit card. You should also read our tips on how to prevent yourself becoming a victim of investment scams or other types of fraud.

Six tips to protect yourself from investment scams

1. Check websites are genuine

If you’ve found an investment opportunity online, check the website is genuine. As a starting point, there should be a green padlock in the address bar showing the web page is secure. All links should work and the contact details of a main switchboard should be in a prominent location. 

2. Beware of unsolicited opportunities

Legitimate financial institutions build relationships with their clients and will rarely contact you with offers out of the blue. If you have been contacted in this way, it could be an attempted investment scam from someone trying to commit fraud. See our advice on how to contact companies you want to speak to.

3. Check the FCA Warning List before making an investment

The recent drop in the Bank of England base rate means investment opportunities may seem more attractive. Fraudsters know this. Seek independent advice before making a decision on an investment, even if you’re told it’s only available for a short time. Find out more from the MoneyHelper

4. Verify brand contact details

Brand impersonation is increasingly common. If you have been contacted by email, pay attention to the sending address. Check the FCA Warning List for some of the contact details used by known fraudsters posing as investment companies. Source legitimate contact details from the FCA Register.

5. Never make snap decisions

Genuine investment opportunities are accessible for longer than a few hours or days. If you’re being pressured to invest quickly or told an opportunity won’t be available for long, tell the person you’re speaking to that you’re happy to miss out. You should never feel pressured into making a decision. 

6. Read payment warnings carefully

When making a payment, take time to check an investment opportunity is not a scam and read fraud warnings during the payment journey. Investec is dedicated to preventing fraud, and we work constantly to ensure our clients’ funds are secure. If you have any concerns, please contact us.