Over the past year, victims have lost over £27 million, on average £14,600 each.
The Financial Conduct Authority (FCA) and Action Fraud have issued new warnings following an uptick in cryptocurrency and foreign exchange-related fraud.
According to the FCA, cryptocurrency and forex trading scams more than tripled in 2018/19, with victims losing more than £27 million, on average £14,600 each. The number of scams reported rose from 530 a year earlier to 1,834.
Foreign exchange scams making ‘get rich quick’ claims have long been a fixture of financial fraud. However, following Bitcoin’s boom in price and publicity of the huge gains made by earlier buyers of the currency, cryptocurrency has more recently become a new favourite for scammers.
At the same time, social media has given fraudsters a new platform. Scammers often use social media accounts to post images of expensive cars and jewellery, portraying a luxury lifestyle supposedly funded from the proceeds of trading crypto or forex investing. Fake celebrity endorsements are also often used.
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Victims are promised the chance to make similar returns, with fraudsters linking to professional-looking online trading websites. Those that sign up and “invest” are then told that their account has successfully made a profit. Fraudsters then encourage the victim to sign up friends and family. Before the victim can withdraw their supposed profit, their account is closed and the fraudster disappears.
According to the director of Action Fraud, Pauline Smith, the latest figures are a stark warning about the risk of online investment scams. She says: “It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.”
The FCA and Action Fraud give the following advice for avoiding a scam:
Don’t assume it’s real – professional-looking websites, adverts or social media posts don’t always mean that an investment opportunity is genuine. Criminals can use the names of well-known brands or individuals to make their scams appear legitimate.
Stay in control – avoid uninvited investment offers whether made on social media or over the phone. If you’re thinking about making an investment, thoroughly research the company first and consider getting independent advice.
Make the right checks – Firms providing regulated financial services must be authorised by the FCA. You can check whether they are authorised on the Financial Services Register. Use the contact details on the Register, not the details the firm gives you, to avoid ‘clones’.
Every report matters – if you have been a victim of fraud or cybercrime, report it to Action Fraud.