#romancescams | ‘Don’t let your defences down’: the rise of investment scams (and how to avoid them) | Be a money hero

Investment scams are on the rise, but there are several resources to help keep you protected.
Photograph: FG Trade/Getty Images

Financial fraud is nothing new, but the number of scams soared in 2020 with fraudsters taking advantage of financial uncertainty and coronavirus worries to swoop on vulnerable victims.

According to data published by Action Fraud in November, there was a spike in scams between May and September. The types are myriad, from stereotypical “romance” scams, where people are befriended online then duped, to fake tax emails and impersonation scams.

But one of the most common to plague consumers is investment scams, with Action Fraud reporting that between September 2019 and September 2020 it received more than 17,000 reports of investment fraud, involving £657.4m in losses, up 28% on the previous 12 months.

According to Peter Hazlewood, group financial crime risk director at Aviva, investment frauds are one of the biggest trends when it comes to scams at the moment. He says that around 95% of the frauds reported to Aviva since the first lockdown are in this category, and the company has identified 26 other investment companies impacted by this type of fraud.

Too good to be true?
The scam capitalises on people’s worries about low interest rates by offering too-good-to-be-true investments that appear to offer high returns, and which are designed to lure in savers looking for a safe place for their investments. The highly-complicated schemes, often accessed via online links on popular search engines, present people with appealing “products” with attractive rates of interest purporting to be from trusted names such as Aviva. Mimicking everything from the company’s website to the sales and compliance staff who call to take details, the scams are proving worryingly effective in extracting people’s savings from them, leaving them with nothing.

They come at a time when financial worries are high on people’s list. According to research by Aviva last year, nearly a third (30%) of UK adults aged 45-54 are concerned that the financial strain caused by the coronavirus pandemic is negatively impacting their mental health.

Investment scams prey on people from a specific demographic, says Hazlewood, and play on those worries about financial security. Often aged between 55 and 80, they are people who are nearing the end of their career or are retired and have built up an investment portfolio. “They may or may not be investment savvy but are almost all in the vulnerable category from the point of view of their age group,” he says.

Spot and report
The threat is sinister and very real, but being forewarned is forearmed, and more tools than ever are at consumers’ disposal to help them spot such scams and, should they fall victim, report them quickly.

Aviva has launched its own fraud hub, which offers a range of information about all the latest scams including real-life examples, names of companies that have tried to contact potential victims, and the option to report a scam (whether you’re an Aviva customer or not). It also includes a whole range of tips to help people keep their money safe.

One of the pointers explains how to recognise potentially fake sites. While many are convincing, some telltale signs include poor-quality images and text, missing contact details or links that purport to take you to another part of the website but actually take you to a blank page or nowhere at all. Another key sign is something being too good to be true – yet, Hazlewood says, this is often the very thing that reels people in. “Some of these returns are advertised as between 4-6% per annum, which is unheard of at the moment, but people think: ‘Well, that’s much better than I’m getting, and, oh, it’s Aviva so it must be safe.’”

Aviva isn’t alone in offering resources to help spot scams. The Financial Conduct Authority’s ScamSmart scheme also offers information on potential scams and frauds, as well as what to do if you think you’ve fallen victim to one.

On top of these resources, Aviva’s says it’s vital to do your own research. Rather than seeing an offer on a comparison site or hearing about it from someone else and jumping in feet first, it’s important to check the company’s official website and speak to them directly. You should also take a close look at the website’s disclaimers and terms and conditions, Aviva suggests.

Another layer of security is to go through an independent financial adviser or broker, says Hazlewood. But the biggest weapon is scepticism. “These frauds are designed to bring your defences down,” he says. “They are designed to be credible, so the most important thing is don’t let your defences down. Be sceptical the whole way through. Look on our fraud hub, check out ScamSmart, and just be sceptical.”

Scammed? Act quickly
But what if, despite all that, you do become a victim of fraud? It doesn’t mean all is lost, says Hazlewood, pointing out that in some cases people’s money has been recovered. But it’s often about time. “Speed is of the essence. The most important thing is to tell us. It can happen to anybody, and it’s a natural human reaction to be embarrassed, but don’t be. Don’t sit on it, because then the money is gone. If there is any concern whatsoever, tell us.”

Many financial institutions, Aviva included, have options to report suspected fraud, says Hazlewood, and even the tiniest piece of information could be the “missing piece of the puzzle” when it comes to catching the perpetrators of this kind of financial fraud.

“We’re trying really hard to bring these criminals to justice and we’re all working together along with law enforcement. Criminals do not respect organisational boundaries – we have to work together, so it’s very important that people get intelligence to us and we will support them through the whole process.”

Find out how to harness your money superpower with tips, tricks, and information on managing money in today’s ever-changing world. Read more here

The views expressed in this article do not constitute financial advice. The value of investments may go down as well as up and you may not get back the amount you invested.

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