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Ten ways to protect yourself from investment fraud

individual investment fraud
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KP Law is a consumer champion law firm. Acting for clients who deserve to win, our Investment Fraud & Mis-Selling team helps individuals impacted by investment and pension scams, fraud, and mis-selling. And, with extensive experience in this area, we help our clients get their money back.

However, the best way to protect people from financial crime is to help ensure they don’t fall victim to scam investments in the first place. Here are some top tips to protect yourself from investment fraud.

1. Understand the risk

The more you know about investment fraud, the more likely you will spot it when something is “off”. Here are some common types of investment fraud to watch out for:

Sports investment fraud

Many sportsmen and women have lost fortunes due to financial scams or negligent advice. 

Tax avoidance fraud

Negligent or criminal financial advisors talk clients into making fraudulent investments without warning them that such schemes are illegal. This can leave victims open to the wrath of HMRC.

Occupational pension mis-selling

This type of pension mis-selling happens when people are urged to transfer into unsuitable schemes from safe and secure defined benefit (DB) pensions, otherwise known as final salary pensions.

Military pension mis-selling

Before 2015, thousands of service personnel were targeted and persuaded to move their valuable pensions into risky, unregulated, and unsuitable private schemes and scams. 

Cryptocurrency investment fraud

Fake advertisements for cryptocurrency investments on social media are a growing concern. These ads often click through to websites that look genuine, appear to be run by a legitimate financial services company, and seem to be endorsed by well-known celebrities. Offering high, guaranteed returns, these advertisements are often fake, and people lose all their money after “investing”

2. Don’t be pressured into investing

It can be tempting to invest quickly if you are scared that you might miss out on a great opportunity. But a reputable organisation will never pressure you into investing. Criminals use promises of discounts and early investment bonuses to pressure people into investing without doing the proper diligence.

3. Research any potential investment

Take some time to research the company and scheme before making a significant financial decision. This includes checking the Financial Conduct Authority’s (FCA) register to make sure the company and advisor are regulated by the FCA. This gives you a level of protection if things go wrong.

But be aware that some scammers create fake websites to make it appear as if you are investing with a regulated company. If you are in any doubt – and especially if it seems too good to be true – contact the company using their legitimate website (not the one the advert links to) to make sure they run the scheme.

Check the FCA register here.

4. Don’t invest if you are contacted out of the blue

Criminals often cold-call or otherwise target potential victims (e.g., via post, text, social media, etc.). So, if an advisor/scheme contacts you out of the blue, it is highly likely that the investment is fraudulent. It is not unusual for a scammer to pretend that they are calling in response to an interest you have shown elsewhere, so be vigilant if you get any unexpected investment opportunities.

5. Don’t believe everything you read

To trick unsuspecting victims, fake cryptocurrency and other investments are advertised on social media (and other online platforms). This also applies to offline ads and brochures. Be wary of fake reviews and endorsements created by scammers that provide a false sense of security.

6. If it seems “too good to be true”...

It might not be new wisdom, but the adage “if something seems too good to be true, it probably is” still applies. Fraudsters know they must convince people to invest, so they often promise fantastic, guaranteed returns and exotic investments (e.g., film, wine, and cryptocurrency) to get potential “investors” excited. But even smaller, less glamorous investments can be fraudulent, so you should always research any potential investment before committing.

7. Check the FCA warning list

The FCA has created a warning list to highlight the firms that it knows are operating without its authorisation. However, the FCA does warn people that “Even if a firm isn’t on our list, it may still be a scam – firms change names and details all the time”.

8. Speak to an independent financial advisor

If you are investing a significant amount of money, it is always worth speaking to an independent financial advisor first.

However, this does not guarantee that you won’t fall victim to investment fraud. At KP Law, we have clients who have used UK-regulated financial advisors and have still received negligent or criminal advice. However, if you use a UK regulated advisor, you will be able to seek compensation if something goes wrong.

Do not use any advisor suggested by the firm/scheme you are considering investing in.

9. Report anything suspicious

If you are concerned that an investment opportunity might be a scam, contact the FCA to report it. Find out how to do this here.

10. Know how to get your money back

At KP Law, we help people affected by investment fraud get their money back. Providing a cool head in a crisis, we remove the burden from your shoulders as we fight for justice. What’s more, because we offer no-win, no-fee funding arrangements, you benefit from expert legal support and complete peace of mind without having to worry about costs.

Our solicitors have even won cases where victims had been told that there was little to no chance of compensation.

Contact us in confidence to find out how we can help.

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