Bitcoin and other cryptocurrencies saw their prices jump as coronavirus hit the economy and investors looked for new opportunities. Cryptocurrency investing is an inherently volatile venture but today, Action Fraud warned it is being made more dangerous through new scams found on social media.
According to Action Fraud, over £63million has been lost nationally by victims of investment fraud they were referred to by a social media platform.
Some of these victims detailed they were approached directly by an investment fraudster, while others said they were attracted to a fake investment through adverts.
Superintendent Sanjay Andersen, from the City of London Police’s National Fraud Intelligence Bureau, commented on these results.
He said: “Reports of investment fraud have increased significantly since the start of the coronavirus pandemic, which is unsurprising when you think the vast majority of us have had to conduct nearly every aspect of our lives on a computer or mobile phone.
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This is specifically impacting younger savers and investors, with the City of London Police saying the use of social media by criminals is helping to “buck the trend” for typical investment fraud victims, with under 30s being most affected.
Specifically, 27.5 percent of all investment fraud victims who mentioned social media in their report were aged 19-25, and 61 percent were men.
By contrast, when looking at investment fraud reports where social media didn’t play a factor in the scam, the average age of victims was over 50.
Additionally, criminals are also using social media influencers to carry out their scams, exploiting the brand image and reputation of well-known individuals without their knowledge and advertising “bogus” celebrity endorsements.
Myron Jobson, a Personal Finance Campaigner at interactive investor, responded to these findings.
She warned: “These scams feed on the FOMO (fear of missing out) culture that is rife on social media platforms, luring users in with phoney ‘too good to be true’ investment opportunities amid posts showing users living their ‘best life’.
“However, these scams have devastating consequences on victims, both financially and emotionally.
“There is an epidemic of financial scams in the UK which has been exacerbated over the past year by the pandemic, with fraudsters taking advantage of the Covid tumult to hide their nefarious schemes.
“We all have to be on the lookout for this, and social media firms have a big role to play to weed out scam adverts on their platforms.
“It is all too easy for unscrupulous individuals to promote their scams to the masses, so it is paramount that the Online Safety Bill puts a legal onus on these companies to do more in tackling the issue.
“Financial companies, charities as well as the regulator have been screaming for the bill to be amended accordingly.
The Government must now act to pull the plug on social media scammers.”
Action Fraud concluded by highlighting how people can protect themselves from these damaging investment scams:
- Be suspicious if you are contacted out of the blue about an investment opportunity. This could be via a cold-call, an e-mail or an approach on social media.
- Don’t be rushed into making an investment. No legitimate organisation will pressure you into making a transaction, or committing to something on the spot. Take time to do your research.
- Seek advice from trusted friends, family members or independent professional advice services before making a significant financial decision. Even genuine investment schemes can be high risk.
- Use a financial advisor accredited by the Financial Conduct Authority. Paying for professional advice may seem like an unnecessary expense, but it will help prevent you from being scammed.
- Always check theFCA Register to make sure you’re dealing with an authorised firm and check the FCA Warning List of firms to avoid.
- Only use the telephone number and email address on the FCA Register, not the contact details the firm gives you and look out for subtle differences.
- Just because a company has a glossy website and glowing reviews from ‘high net worth’ investors does not mean it is genuine – fraudsters will go to great lengths to convince you they are not a scam.
- Remember, if something sounds too good to be true, it probably is.