In recent years, thousands of people have fallen victim to “get rich quick” schemes using online trading platforms.
Social media campaigns aimed at convincing people to start investing in forex and cryptocurrency scams are on the rise and are often backed by fake celebrity endorsements.
According to the FCA and Action Fraud, the number of cases is on the rise. So, here’s a brief look at how these scams work and how you can avoid them.
How does it work?
Cryptocurrencies have become increasingly popular. There are over 1500 types, with the most famous being Bitcoin. They only exist online and are not controlled by any particular country, bank, or treasure.
In addition to this, they are also anonymous. This makes them a popular choice among scammers, as they are very difficult to trace back to any one person.
Scammers will use ads and posts on social media to lead users to professional looking websites, where they try to convince them to invest in the schemes by promising fast profits.
A lot of the time, they will spend time talking to the victims about investments and building trust. This might be over the phone or via messages.
Once the victim has made the investment, there’s a high chance they won’t hear from the company again or be able to get their money back
Or, the scammer might maintain communication and convince them to part with even more money by claiming that their investments are going well and that they are making a profit.
How consumers can protect themselves
The FCA is currently running campaigns encouraging people to familiarise themselves with these types of scams.
Their advice is:
- Never assume an investment scheme is legitimate even if it seems professional
- Always research the company thoroughly
- Check with the relevant financial regulator to see if the company is real
- Do an internet search to see if there are any warnings or complaints
According to the consumer group Which?, very few of these scams are ever solved. Head of money for the group, Gareth Shaw, says: ‘In order to fight this worsening crime, a more joined up approach is needed from the government, police and businesses whose services are exploited by fraudsters to prevent people from being scammed in the first place – and to act fast to recover their money when the worst happens. The banking industry must urgently step up its preparations to introduce confirmation of payee name checks, which could cut bank transfer fraud in half overnight.’