The UK’s Financial Conduct Authority (FCA), in conjunction with Action Fraud, has issued a report showing that last fiscal year £27 million was lost to crypto and forex investment scams.
The report from the FCA and Action Fraud, a national reporting centre for fraud and cyber crime, found that the number of scams reported nearly tripled from the previous financial year, running from April 1st 2018 to April 1st 2019, with 1,800 scams reported. It also finds that the average scam victim lost over £14,600 last financial year.
The FCA attributes the success of such scams to fraudsters’ use social media to promote ‘get rich quick’ online trading platforms with high returns from investments in crypto and forex.
According to the FCA, fraudsters often lead investors to believe that their first investment returned a profits, causing them to invest more money or introduce friends and family to the scam with the false promise of greater profits. However, eventually the returns stop, the customer account is closed, and the scammer disappears with no further contact.
Pauline Smith, director of Action Fraud says: “’These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms. It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate. Action Fraud is pleased to be partnering with the FCA to raise awareness of online trading scams, and we hope it will help prevent more people falling victim.”
Mark Steward, the FCA’s executive director of enforcement and market oversight, adds: “We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms. Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal…and if in any doubt – don’t invest.’
The FCA’s new ScamSmart campaign will be running advertising to raise awareness of online trading scams. Running on social media, ScamSmart aims to make consumers more sceptical of ‘get rich quick’ trading scams promoted online.