How to avoid investment scams - Financial Conduct Authority

How to avoid investment scams

Published: 15/05/2013
Investment scams come in many forms and with different tricks but a common feature is being promised a high return or tax-free benefits. See the steps you can take to spot and avoid investment scams.

Fraudsters might contact you out of the blue after taking your phone number from publicly available shareholder lists. But the high-pressure sales tactics can also come by email, post, word of mouth or at a seminar.

You might be told you could get inside information, trade secrets, a hot tip or special expertise, often in overseas markets or in companies you have never heard of. But this should be a warning sign that this could be a scam that will mean you lose most or all of the investment.

To help you spot and avoid investment scams, follow our ten steps to protect yourself.

Step 1: Be firm in saying ‘no’ 

Keep in mind that authorised firms are unlikely to contact you out of the blue with investment opportunities. A legitimate company is also unlikely to use harassment, high-pressure sales tactics, or long and persistent phone calls, to get you to invest.

Be firm: if the fraudsters can keep you talking you have not really said ‘no’.

Step 2: Avoid unwanted sales calls

Reduce the number of unsolicited mailings and cold calls you receive by registering with the Telephone Preference Service and Mailing Preference Service.

Step 3: Check the Register

We strongly advise you to only deal with financial services firms that are authorised by us, and check the Register to ensure they are.

If there are no contact details on the Register or the firm claims they are out of date, contact our Consumer Helpline on 0800 111 6768.

Step 4: Confirm the firm is genuine 

To confirm the identity of an authorised firm ask for their ‘firm reference number’ (FRN) and contact details, but always call them back on the switchboard number given on the Register.

You should access the Register from our website – www.fca.org.uk – rather than through links in emails or on the website of a firm offering you an investment. Also check the address of our website is correct and there are not subtle changes that mean it is a fake.

Step 5: Search our list of unauthorised firms

Search our list of unauthorised firms to avoid doing business with, although their names are likely to change regularly.

We add new names to this list as soon as possible, but if the firm which has approached you does not appear on our list, do not assume it is legitimate – it may not have been reported to us yet.

Step 6: See warnings from abroad

If you are dealing with an overseas firm or scheme you should check how it is regulated and follow similar steps to these.

We also have some warnings from foreign regulators about firms conducting unauthorised business.

Step 7: Ensure you are protected

Remember that if you give money to a firm that is not authorised by us or is based abroad, you will not have access to the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong.

Step 8: Get professional advice

Consider getting independent professional advice before making any investment decision, particularly if the type of investment is unfamiliar to you.

Scammers are often vague about the investment and how it gives such high returns, or will explain it in complex detail – but if you don’t understand how it works, do not invest.

Step 9: Beware of a second scam

Be especially careful if you have already been scammed by fraudsters as they are likely to target you again or sell your details to other criminals.

The follow-up scam may be completely separate or related to the previous fraud, such as an offer to buy the investment after you pay an administration fee.

Step 10: Report the scam

If you have been approached about an investment scam or think you are a victim of a share scam, contact our Consumer Helpline on 0800 111 6768 or use our share fraud reporting form.

You can also see  what to do if you think you have been scammed.

Consumer Helpline

t: 0800 111 6768

e: consumer.queries@fca.org.uk

See more ways to contact us


Related links

Check the Register

Unauthorised firms to avoid 

Warnings from foreign regulators 

Share fraud reporting form


External links

Action Fraud

The national fraud and internet crime reporting centre

Money Advice Service on scams

Useful tips to protect yourself from scams and identity theft

Telephone Preference Service

Mailing Preference Service

 



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