British investors have not been spared the cruelty of fraudulent scams involving digital assets and forex. Britain’s financial regulator, the Financial Conduct Authority (FCA), released a press statement on May 21 highlighting that local investors were swindled out of more than £27 million ($34 million) in investments involving cryptocurrencies and forex in 2018/19.
The number of fraudulent reports tripled to 1,834 in the last financial year from 530 in the 2017/18 financial year. The report reveals that the average loss is £14,600.
Same Old Story
There was nothing new or innovative about the scams as the fraudsters resorted to the tried-and-tested method of promoting their “get-rich-quick” schemes on various online platforms. The scammers “make-up” fake celebrity endorsements of their products in order to lure unsuspecting investors who are drawn by images of luxury items that include vehicles and expensive watches.
These fake posts are then linked to professional websites where investors are urged to invest in fraudulent investment schemes.
Just like all Ponzi Schemes, the investors are made to believe that their initial investment matured. The scammers convince the victims to invest more money and introduce friends and family in return for great payouts. It may work for some time while the scammer collects more money. The returns stop coming eventually, and the company vanishes in thin air without any notice, leaving the investors stranded.
Tackling Fraudulent Cryptocurrency Schemes
The FCA has partnered with Action Fraud, a consumer fraud helpline in an effort to combat the rising number of cryptocurrency and forex scams. The two organizations are running an advertising campaign to warn the public about such scams, how to spot them, and obviously stay away from them.
Action Fraud Director Pauline Smith said:
“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.”
Smith added that Action Fraud is happy to be partnering with the FCA to help people to be aware of online scams.
“We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms,” said FCA’s executive director of enforcement and market oversight Mark Steward.
Steward said that scammers are very convincing. He wants would-be-investors to do their own due diligence before making investments online. He added that people could protect themselves by visiting the ScamSmart website before investing or just stay away from such programs if in doubt.
The press statement offered these tips on how to stay safe:
- People should not assume that even professional looking websites are real. Investors need to be wary of criminals who use names of popular brand or individual in order to gain credibility.
- Investors should scrutinize investment offers made through cold calling or via social media
- Investors should deal with firms regulated and licensed by the FCA.
- Report cases of fraud or cybercrime.