Investment Frauds Scams On Social Media

As per the reports, victims of social media platform frauds lost over £63m to investment fraudsters. The victims reported the crime to the national reporting centre, Action Fraud, where they said they lured the investors into buying into fake investment schemes through advertisements.

The reports of investment fraud have amplified since the coronavirus pandemic, mainly due to increased monetary transactions online through mobile and computer. Online transactions indicate that criminals have a higher opportunity to target unsuspecting customers. 

The government agency said everyone should conduct complete research on the investment schemes offered online and check other details on the FCA website before handing over personal information and money to the scammers. 

In the last year, around 5039 reports of investment frauds related to social media platforms were made, where 44.7 per cent invested in buying fake commodities or were scammed to buy some cryptocurrency or other digital product. As per the report, Instagram was the most vulnerable platform for such references, followed by Facebook.

The city of London police said the criminals targeted buyers under 30s through social media. The reports by the government agency found that 27.5 per cent of the victims of social media fraud were in the age group from 19 to 25, where 61 per cent were men; adversely, the victims above 50 years did not get into the deal through social media platforms. 

The criminals' key strategy is to use social media influencers to carry out the scam. Social media scammers can use the brand image and reputation of the influencers without the influencer's knowledge. They create a bogus identity in their name without their knowledge and advertise bogus celebrity endorsements. 

They hire employees with professional experiences to send online adverts, create websites, send emails and market fake investment deals in sectors like cryptocurrency, bonds and foreign exchange trading. In addition, they post fake testimonials only to appear legitimate. 

Between April 2020 and March 2021, Action Fraud got over 500 investment fraud reports where bogus celebrity endorsement references were made, and such frauds accounted for losses of over £10m.

One of the trends the crime analyst at the National Fraud Intelligence Bureau found was cloned company investment, where the criminals copied a known branded legitimate investment firm to scam buyers into investing in fake deals. 

Some also reported that they were approached by a broker who had a LinkedIn profile. In addition, they had related backup documents that persuaded them to believe the offer was legitimate. 

The Financial Conduct Authority and the National Economic Crime Centre warned about the cloned company. Also, they identified that 8 per cent of the victims had initiated contact with the suspect before getting direct contact or approached the firm through adverts on the social media platform. 

In addition, the average age of the victim involved in cloned company fraud was 60 –almost double that of victims contacted on social media.

How To Avoid Such Fraud?

• One should always be cautious of any such opportunity coming out of the blue through a cold call, email or social media message. 

• One should not rush to invest without checking all the details. Any legitimate investment company will not pressurise the buyer to invest or commit to buying their product at any time. Therefore, one should do complete research before investing in any deal.

• One should contact friends, relatives and independent professionals and get their advice before communicating with the firm. 

• Most investment schemes come with a varied amount of risk factors, and one should be cautious and aware of the risks involved in any such scheme, 

• One can use accredited sources to gain more information and get professional advice.

• Check the Financial Conduct Authority website and FCA register before making any investment to know about the legal standing of the firm. One should avoid investing through firms that are given in the warning list. 

• The company trying to sell you their investment product should only provide the telephone number and email address as per the FCA register.

• Every investor should always note when an opportunity sounds too good to be true, it is more than likely a scam.