ISA and crypto investors warned 'one call or email' could empty their bank accounts

As more Brits turn to investing as a means of bolstering their savings and planning for the future, fraudsters are capitalising on this trend. Investment scams have become one of the most prevalent types of consumer scams in the UK, with Action Fraud revealing that victims were swindled out of more than £890 million due to investment fraud in 2023 alone.

With this alarming statistic in mind, trading experts at DayTrading.com have shed light on some of the most common investment scams currently plaguing British consumers, pointing out key warning signs to be aware of. These scams often kick off with a phone call, email, or social media message offering an enticing "once-in-a-lifetime" opportunity, frequently promising guaranteed returns, minimal risk and quick results.

Fraudsters often masquerade as legitimate financial institutions, registered brokers, or government-backed investment schemes to gain trust. There are usually tell-tale signs associated with common investment scams that should alert consumers to steer clear. Recognising these signs can help you take measures to protect yourself.

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Beware of fake brokers and wealth manager scams

Scammers may pretend to be professional brokers or financial advisers, often using cloned websites or counterfeit registration numbers to appear genuine. They might offer shares in well-known companies or access to exclusive financial products.

A red flag of these types of scams includes high-pressure tactics urging you to invest quickly. Fraudsters often use urgency as a manipulation tactic and may claim that an investment opportunity is only available for a short time, or that the offer is exclusive and will expire soon.

They'll push you to "act now" or risk missing out. This is designed to stop you from doing proper research or seeking independent advice.

Legitimate investment firms will give you time to think things through and will never pressure you into making quick decisions. If a company seems to be coercing you into making a snap judgement and investing as soon as possible, it is probably a scam.

Another red flag is the lack of a clear or verifiable company address. A genuine, regulated financial firm should have a registered office address that can be easily found and verified.

Scammers may either provide vague details or use fake addresses that lead nowhere. Some will use a real company's name but change the contact information.

Always cross-check the company's details on the Financial Conduct Authority (FCA) register and avoid dealing with firms that won't clearly provide their physical address or are reluctant to share basic company information.

Additionally, if a company is asking for payment into personal or overseas bank accounts, this is a major red flag. These tactics make it challenging to trace or recover funds if things go awry.

Trustworthy firms will only request you to transfer money to a business account in the company's name, typically held at a UK-regulated bank. Be particularly wary if they ask for unusual payment methods such as cryptocurrency wallets, prepaid debit cards, or wire transfers.

Cryptocurrency and trading platform scams

Crypto-related scams are rife, often involving deceptive trading platforms that promise massive returns from modest investments. Once you deposit money, you may see fabricated returns on a dashboard, but when you attempt to withdraw funds, communication ceases, or additional fees are demanded.

A significant red flag of these scams is unregulated trading platforms. Fraudsters frequently promote flashy online trading platforms that purport to offer access to forex, crypto, or stocks with minimal effort.

While these sites may appear professional, many operate without regulation, meaning they can vanish at any time along with your money. These platforms often falsify your account balance to give the illusion of profits, but when you try to withdraw, you're blocked or asked to pay unexpected fees. Always verify whether a trading platform is authorised on the FCA Register, as if it's not regulated in the UK, it's likely unsafe.

Another widespread tactic employed in crypto and trading scams involves unsolicited contact via social media platforms such as Instagram, TikTok, Facebook, or messaging applications like WhatsApp. Fraudsters frequently masquerade as accomplished traders, influencers, or even appealing individuals seeking to establish a connection.

These communications typically feature pledges of "insider tips," trading signals, or investment prospects. Should someone unknown contact you unexpectedly with investment guidance or a money-making proposition, it's almost certainly fraudulent.

Likewise, in certain crypto scams, criminals will request that you install remote desktop software under the guise of assisting you to establish your trading account, oversee your investments, or complete a transaction. Once installed, they can seize control of your device, obtain banking information, passwords, and move funds without your consent.

Never permit anyone remote access to your mobile or computer unless you're completely certain they represent a legitimate, verified organisation. No authentic investment company will demand remote access to handle your transactions.

Investment by its very nature always carries risk, so if a firm is promising guaranteed returns, it's likely a scam. Fraudsters regularly employ phrases such as "risk-free", "100% guaranteed," or "you can't lose" to entice people into parting with their cash, and this represents another significant red flag for crypto scams.

They might even present fabricated testimonials or account screenshots to establish credibility. Remain sceptical of any proposition that appears too good to be true.

Bond and fixed-income investment scams

These fraudulent schemes feature bogus or cloned bonds purporting to deliver fixed, above-average interest rates. Victims are frequently older savers pursuing stable, low-risk alternatives and are occasionally approached after submitting personal information to "investment comparison" websites.

One prevalent scam sees criminals promoting counterfeit or "cloned" bonds allegedly issued by renowned banks, insurers, or asset management companies. These fraudulent bonds are typically marketed with enticing interest rates that appear marginally superior to the norm, rendering them credible and attractive to prudent investors.

Nevertheless, if the bond doesn't appear on the issuing organisation's official website or can't be authenticated through reliable sources such as the FCA Register, it's probably fraudulent. Criminals routinely replicate the branding and titles of genuine financial companies whilst using their own contact information and falsified documentation. Additionally, dodgy bond providers frequently reassure potential victims and attempt to build trust by falsely claiming their investments are protected by the Financial Services Compensation Scheme (FSCS) should the firm collapse.

However, FSCS protection only applies to specific products and firms that are properly authorised by the FCA. Be sure to check whether a specific investment is eligible for FSCS protection by visiting their website or calling their helpline.

Another red flag is receiving a phone call, email, or message out of the blue promoting a bond or fixed-income investment. It is illegal for firms to cold-call about pensions and investment products in most circumstances, yet many scams begin this way.

This often starts with a "representative" offering limited-time deals, exclusive access to private placements, or "corporate bonds" not available to the general public. Always treat unsolicited investment offers as a major warning sign.

Pension and ISA scams

Fraudsters target savers by offering to transfer pensions or ISAs into high-yield investments that are often too good to be true. These are frequently based offshore or in high-risk, unregulated schemes.

One of the biggest red flags in pension scams is any offer to help you "unlock" or access your pension savings before the age of 55. Scammers often promote early pension release as a legal loophole, claiming you can withdraw your pension and reinvest it elsewhere for better returns.

Be mindful that dipping into your pension before the age of 55 is almost always illegal, barring exceptional circumstances such as terminal illness. This can lead to hefty tax penalties from HMRC. In many instances, fraudsters will also slap on exorbitant fees or simply nick the money.

Another red flag is con artists masquerading as financial advisers and purporting to be calling from overseas offices or global investment firms. They'll often speak with assurance and use financial lingo to appear legitimate, but they typically operate from unregulated jurisdictions where UK law doesn't apply.

These so-called advisers may also pressure you into shifting your pension into high-risk, offshore schemes that are unregulated and nearly impossible to recoup money from once invested. Be particularly sceptical of anyone reluctant to provide an FCA registration number or who brushes off your worries about regulation.

Lastly, legitimate pension transfers, investments, and ISA products must come with a cooling-off period, during which you have the legal right to cancel or withdraw without penalties. Scammers often bypass this entirely or tell you that the investment is "final" or "non-refundable".

They may also try to rush you into a decision before you've had time to fully mull it over. Being told there's no way to cancel once you sign up, or being discouraged from reading the small print, is a major red flag. Always ensure you're given time to review terms and conditions and confirm that a cooling-off period is clearly included in any documentation you receive.

Tobias Robinson, CEO of DayTrading.com, said: "The FCA and consumer protection bodies urge anyone looking to invest should stay vigilant and proceed with caution, as scams have the potential to seriously impact your finances if you're unlucky enough to be targeted by one.

"Hopefully, these tips will provide you with the tools to identify scams yourself and mitigate their potential effects. If you're in doubt, always check with a third party and don't invest unless you're positive of what you're investing in.

"If you think you've been scammed, immediately cease all contact with the suspected scammer. Make sure you report the scam to Action Fraud, either online or through its helpline, and contact your bank immediately to try to freeze or recover funds. Report to the FCA if the scam relates to financial services and, if your pension is involved, contact The Pensions Advisory Service.

"As fraudsters continue to evolve their tactics, staying informed is your best defence. Always double-check investment opportunities, avoid high-pressure sales tactics and never be afraid to say no. If something doesn't feel right, it probably isn't."