The Financial Conduct Authority (FCA) publishes investor warnings about scams that have targeted individuals in the UK. A short summary of some of these scams is given here, and others not specifically highlighted by FCA, as we want to help keep you and your finances protected. More information can be found on the FCA website at www.fca.org.uk, by entering the phrase “how to avoid investment scams” in the search box towards the top right of the screen.
Cloned Firms & Individuals
Scammers are contacting individuals by telephone, usually out of the blue, to push some investment scheme or other (often “penny shares”), but claim to represent bona fide investment firms. They are able to give details of the firm as well as referring to names of directors/advisers. The caller usually then gives alternative contact points such as their own phone number/address/website details.
Why the scam works – The victim is fooled into thinking they are dealing with a bona fide firm when they are not. Scammers can copy a firm’s website well enough to pass casual inspection, on which contact details may have been subtly altered. The scammers may even provide a website address for a fake version of the FCA register containing their own contact details. Victims are likely to receive a hard sell of one or more particular investments, which usually prove to be worthless or non-existent, and the victim has no protection from the Financial Ombudsman Service or Financial Services Compensation Scheme.
Basic details about investment firms, including contact details, directors and advisers are available to the public (and scammers) on the FCA Register, so the scammer can refer to things and names that the victim may already be familiar with. The scammer can telephone the firm to find out how it answers incoming telephone calls, and use the same wording on their own lines.
How to protect yourself – Is it normal for the firm to call you out of the blue, particularly to promote “an exciting new investment opportunity”? Does the individual calling you have access to information on business you have done with the firm previously? If in doubt, call the firm back on the switchboard number you know, or that has been provided on correspondence about business you have completed previously, or that is shown on the FCA Register (www.fca.org.uk, top right of the screen).
Fake FCA Communications
Scammers contact individuals by e-mail, phone or post claiming to be from the FCA. Letters and e-mails may use FCA logos captured from their website or literature. Individuals are told they owe the FCA money, or are asked to provide personal information such as copies of payslips, passport, banks details etc. Or they are told the FCA has identified they are owed money perhaps collected from bank fines, and your bank account details are needed to make payment.
Why the scam works – investors will have heard about the FCA from their Adviser, or in the news. We’re not sure why someone would be convinced that they owe money to the regulator, but we can see why, with large bank fines having been in the news, someone may believe that those fines could be being distributed to investors. Sadly, HM Treasury pockets all fines, not the regulator.
How to protect yourself – Don’t give anyone your bank account details unless you’ve contacted them and have good reason to be giving it. The FCA never contact members of the public asking for money or their bank details, if in doubt contact their Consumer Helpline on 0800 111 6768. Look out for poor grammar in e-mails and letters, e-mail sent from a hotmail or gmail account, and overseas contact numbers and addresses.
Rather than trying to hack online banking accounts, which are normally protected by high levels of security protection and a limited number of login attempts before the account is locked, fraudsters are turning to e-mail accounts as a route into individuals’ financial information. With access to an individual’s e-mail account, a fraudster may be able to communicate with the individual’s financial institution through a bona fide communication route, and with regular monitoring of the account, can delete their own sent items, and replies as and when received
Why the scam works – e-mail accounts normally have low level security, as they can be accessed with just the (known) e-mail address and a password – normally unlimited attempts at access are allowed, because of the e-mail provider’s inability to verify the real account holder in a secure way, were they to lock them out after 3 failed attempts. An individual may be completely unaware that their account has been hacked, and may have previously corresponded with their bank or financial organisation by e-mail, so the fraudster can enter into correspondence with them and try to set about changing contact details or payment instructions.
How to protect yourself – If you have personal or financial information on your e-mail account, or correspond with a financial institution by e-mail, set a password with an appropriate level of difficulty, and change it from time to time. If possible, ask your financial organisation to double check with you by another contact method any instructions for withdrawal, or instructions over a certain amount. If possible use separate e-mail accounts for financial and trusted personal correspondence, and general internet use such as subscriptions, free trials or newsletters.
Remember the golden rule – if it sounds too good to be true, it probably is!