As the saying goes, if it sounds too good to be true, it probably is!
Scams can appear in many different forms, targeting both experienced investors and retail customers alike. They also come in many ways... from an unexpected phone call offering an investment opportunity, to an email encouraging you to buy shares that are about to go up in value based on ‘secret’ information. Alternatively, you might be encouraged to buy shares in a company you have never heard of, (often because it does not exist), or to invest in property, or a get-rich-quick scheme.
The calls often come from overseas, and while they promise above-average returns, those who invest usually end up losing their money. Be aware, these scams are also sometimes advertised in newspapers, magazines, or online as genuine investment opportunities.
The scammers are usually articulate individuals, who often pretend to be investment advisors or stockbrokers in order to entice your interest. The scammers are persistent and play on your emotions, making you feel like a fool if you refuse to invest. You will also often be told that you need to make a quick decision or you will miss out on the deal.
For more information about the latest types of scams, you may wish to refer to the Financial Investigation Unit's website.
There are a number of steps you can take to protect yourself from becoming a victim of an investment scam:
- Reject cold calls. All calls should be treated with extreme caution, and the safest thing you can do is to hang up. Likewise, any emails that you receive of this nature should be deleted, whilst any letters, if they contain personal information, should be shredded.
- Check the Commission's warning list, to check out the firm and the investment it is offering. The warnings list may not include all firms that you should be cautious of, but it is a good starting point.
- Check the Regulated Entities page to make sure that the firm is regulated and permitted to give financial advice before you proceed, particularly if it is not licensed in the Bailiwick.
- Seek independent financial advice if you are unsure about an investment or financial product. Find out more information about the work of financial advisers (FAs).
It can't be stressed enough - if a proposition sounds too good to be true, it probably is!
Reporting a scam
Find out more information about how to report a scam!
Further information
If you want any further information on this subject, you may find the following resources useful:
Action Fraud - The homepage of the UK’s national fraud and internet crime reporting centre.
BBC Watchdog – For consumer advice on current financial scams.
Financial Conduct Authority:
- Protect Yourself - For a list of firms unauthorised to operate in the UK.
- Scams – For information about how to spot a scam.
- Scamsmart - FCA - A link to the Financial Conduct Authority's national campaign aimed at protecting those who are most at risk of investment fraud.
Guernsey Financial Investigation Unit - For the latest fraud news updates from the GFIU.
Guernsey Police – For information and advice, or to report a financial crime.
Take Five - A campaign led by Financial Fraud Action UK urging the public to stop and think whether a situation is genuine, and if what you are being told makes sense.
The Little Book of Big Scams – A guide on how to avoid some of the most common scams; produced by the Metropolitan Police Service.
The Little Book of Big Scams, Business Edition - A link to information on scams within businesses.