Investment Fraud

What is Investment Fraud and how can you spot the warning and signs?  This section contains what you need to know about Investment Fraud and how to protect yourself.

What is investment fraud?

It’s estimated that over £1bn is lost to investment fraud each year. It occurs when fraudsters’ pressure people into buying investments that promise high returns, but in reality are either worthless or non-existent. The most common type of investment scam is share fraud, but fraudsters may also offer investments in gold, land abroad, carbon credits, diamonds, shares in hotels or car parks, bamboo and fine wine.

Investment fraud is often sophisticated and very difficult to spot. Fraudsters can be articulate and appear financially knowledgeable. They may have credible websites, testimonials and materials that can be hard to distinguish from the real thing. So it’s important you know how to spot the warning signs.

Spot the warning signs

Investment fraudsters will use a variety of techniques to try to take your hard-earned money, and regularly target experienced investors.

They may do one or more of the following:

  • Make contact unexpectedly about an investment opportunity. This can be a cold call, email, or follow up call after you receive a promotional brochure out of the blue.
  • Apply pressure on you to invest in a time-limited offer, offer you a bonus or discount if you invest before a set date, or say that the opportunity is only available for a short period of time.
  • Downplay the risks to your money or use legal jargon to suggest the investment is very safe.
  • Promise tempting returns that sound too good to be true, offering much better interest rates than those offered elsewhere.
  • Call you repeatedly and stay on the phone a long time.
  • Say that they are only making the offer available to you, or even ask you to not tell anyone else about the opportunity.

Protect yourself

Reject cold calls
People offering high risk investments or scams will often cold call. Legitimate firms are very unlikely to contact you in this way. If you’re called about an investment opportunity the safest thing to do is to hang up.

Check the FCA Warning List
The Financial Conduct Authority’s (FCA) Warning List is a list of firms and individuals that the FCA knows are operating without its authorisation. The tool also provides information about the risks associated with a particular investment opportunity.

Get impartial advice
Seek impartial advice from a financial adviser unconnected to the firm that has contacted you before you make an investment. You can find an advisor on, and VouchedFor.  PIMFA have a list of FCA authorised financial advisers, stockbrokers and wealth managers.

Remember, if an investment sounds too good to be true it probably is! For more information on investment fraud visit the FCA’s ScamSmart website.

Beware of impersonation fraud – Read the ABI guidance note.

Useful Links

FCA – Find out how to be a Scam Smart investorFCA – Avoid scams and unauthorised firmsFCA – Share fraud and boiler room scamsFCA – Unauthorised firms operating in the UK FCA – Regulation US sharesAction Fraud – Boiler room fraud The Money Advice Service – Staying safe against scamsPIMFA Paper: Current Fraud Trends - How to Protect Your Firm and Your Customers 2021