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Coronavirus Investment Scams

April 2020

by Stuart Carswell

If it sounds too good to be true, it probably is

Fraudsters are getting more sophisticated, particularly with investment scams. They can be articulate and financially knowledgeable, with credible websites, testimonials and materials that are hard to distinguish from the real thing. However, if it sounds too good to be true, it probably is.

From simple cons to elaborate schemes, attempts to prise away your hard-earned money are nothing new. Yet there are arguably more windows of opportunity for scammers today than ever, especially with the backdrop of coronavirus (COVID-19) and using this to play on the concerns of investors about their money, market performance and what they should do.

Out of the blue

If you’re contacted out of the blue about an investment opportunity, chances are it’s a high-risk investment or a scam. Scammers usually cold-call, but contact can also come by email, post, word of mouth or at a seminar or exhibition. Scams are often advertised online too.

If you get cold-called, the safest thing to do is to hang up. If you get unexpected offers by email or text, it’s best simply to ignore them. You can register with the Telephone Preference Service and Mailing Preference Service to reduce the number of letters and cold calls you receive.

How to spot the other warning signs

Callers may pretend they aren’t cold-calling you by referring to a brochure or an email they sent you – that’s why it’s important you know how to spot the other warning signs.

Unexpected contact – traditionally, scammers cold-call, but contact can also come from online sources, for example, email or social media, post, word of mouth, or even in person at a seminar or exhibition.

Time pressure – they might offer you a bonus or discount if you invest before a set date or say the opportunity is only available for a short period.

Social proof – they may share fake reviews and claim other clients have invested or want in on the deal.

Unrealistic returns – fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere.

False authority – using convincing literature and websites, claiming to be regulated, speaking with authority on investment products.

Flattery – building a friendship with you to lull you into a false sense of security. When faced with an investment opportunity, especially one that has come out of the blue or is advertised, always ask yourself: ‘Could this be a scam?’ Always take the time to check who you are dealing with.

 

The content in this publication is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.
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