Investment scammers pocketed £13m a week in the past four years

Criminal gangs flogging bogus investments and ‘get-rich-quick’ schemes stole £13m a week in the past four years, according to Action Fraud data revealed by a Freedom of Information (FoI) request.

Scammers use cleverly cloned websites and glossy brochures to pose as regulated companies or create misleading profiles on platforms such as LinkedIn to appear legitimate. Many advertise on social media and search engines to reach millions of potential victims. 

It's a horrifyingly profitable crime and victims can lose their lifetime savings. Some are even targeted a second time by recovery scammers falsely promising to help them recover their losses for an upfront fee.

Criminal gangs have stolen £2.6bn since 2020

Almost 100,000 UK victims reported investment fraud to Action Fraud between January 2020 and September 2023, losing an average of almost £13m each week. The average victim lost £26,773. 

In 2023 alone, 26,740 people were victims of investment fraud – the most people in the four years covered in this research – losing a colossal £527m between them. 

This data was published by the Pensions Management Institute (PMI), following a Freedom of Information request to the City of London Police’s National Fraud Intelligence Bureau (which runs Action Fraud). 

Robert Wakefield, President of the PMI, said:  'The number and sophistication of investment scams is ever-growing. 

'By maintaining a healthy dose of scepticism and training yourself to spot some common red flags, you may be able to protect yourself and your loved ones from becoming victims. 

'Increasing the amount of financial education provided in schools could also help to make people more aware of the risks of investment scams.'

What are the different types of investment fraud?

Investment fraud can be broadly broken down into the following categories:

• Boiler Room Fraud Fake stockbrokers persuade you to buy shares or bonds in worthless, non-existent or near-bankrupt companies. 
• Pyramid or Ponzi Schemes You're persuaded to recruit friends or family (pyramid) or fraudsters pay returns to early investors to gain credibility until the scheme collapses (Ponzi). 
• Fraud Recovery You're asked to pay a fee to someone who pretends they can recover money you lost to a previous fraud for a fee. 
• Pension Liberation Fraud You're encouraged to access your pension early for a large cash sum. 
• Prime Bank Guarantees A bogus investment scheme promising high returns in a short space of time by buying bank guarantees from ‘prime’ banks.
• Time Shares and Holiday Club Fraud You may be offered a sham investment or scammers target existing owners claiming to have a buyer lined up or making false offers of ‘legal compensation'.
• Other Financial Investment Fraud Financial fraud not classified elsewhere, such as involving foreign exchange, cryptocurrency or investment seminars.

Investment scams on social media

Another recent FoI request revealed that reports of investment scams on social media trebled between 2019 and 2022, while total losses have risen from £13m to £75m.

Which? is particularly concerned that some tech giants are failing to remove repeat offenders even after they've been reported as scams. 

One stark example is a known investment fraudster known previously as UK Income Bonds, but currently operating as British Property Bonds and advertising freely on Facebook. We first warned Facebook about this in December 2021, but the adverts kept cropping up. Another one appeared as recently as last week, in April 2024, shown below.

Meta has systems to block scams and any financial services advertisers now have to be authorised by the Financial Conduct Authority to target UK users. 

It told Which? it has removed the ad and associated account. 

How to invest safely 

The Financial Conduct Authority (FCA) offers these questions to ask yourself to help you spot the warning signs of an investment scam:

1. Is it unexpected? Scammers often call out of the blue. They may also try and contact you via email, text, post, social media or even in person.
2. Do you feel pressured to act quickly? Scammers might offer you a bonus or discount if you invest quickly or they may say the opportunity is only available for a short time.
3. Does the offer sound too good to be true? Fraudsters often promise tempting rewards, such as high returns on an investment.
4. Is the offer exclusively for you? Scammers might claim that you’ve been specially chosen for an investment opportunity and it should be kept a secret. 
5. Are they trying to flatter you? Scammers often try to build a friendship with you to put you at ease.
6. Are you feeling worried or excited? Fraudsters may try to influence your emotions to get you to act.
7. Are they speaking with authority? Scammers might claim that they’re authorised and often appear knowledgeable about financial products. 

If you answered ‘yes’ to any of these questions or you’re unsure if a contact is genuine, you should verify credentials.  

Legitimate investment professionals and businesses in the UK are registered with the FCA. You can check the Financial Services Register to make sure a firm or individual is authorised. Remember, some firms pretend to be authorised firms, so always use the contact details on the FS Register. 

The FCA also provides the ScamSmart Investment Checker that allows you to check an investment or pension opportunity you’ve been offered and avoid scams.