May 30, 2024

Investment fraudsters have conned victims out of £2.6bn since 2020

  • Scammers have duped people out of £13million a day using investment fraud
  • Boiler room fraud sees fraudsters sell investments in worthless companies

Fraudsters have stolen more than £2.6billion through investment fraud schemes since the beginning of 2020, research claims.

Between 2020 and the end of last year, 98,525 people have fallen victim to investment scams, according to the Pensions Management Institute, with as much as £13million falling into the hands of scammers every week.

The PMI, which obtained the data through a freedom of information request to the City of London Police’s National Fraud Intelligence Bureau, said victims were scammed out of an average of £26,773.

In 2023 alone, 26,740 people were victims of investment fraud, the highest number in four years, losing £527million.

Expensive mistake: Investment fraud victims were scammed out of an average of £26,773

Robert Wakefield, president of the Pensions Management Institute said: ‘Our research shows that a shocking number of people are falling victim to investment fraud. 

‘It is concerning that every year thousands of people are losing millions of pounds to financial scams in the UK. The number and sophistication of investment scams is ever-growing.’

‘By maintaining a healthy dose of scepticism and training yourself to spot some common red flags, you may be able to protect yourself and your loved ones from becoming victims. 

‘Increasing the amount of financial education provided in schools could also help to make people more aware of the risks of investment scams.’

What is ‘boiler room fraud’?

The most successful form of fraud, known as boiler room fraud, has seen victims lose out on more than £500million over the past four years.

Boiler room fraud involvers scammers posing as stockbrokers calling victims to encourage them to invest in shares or bonds in worthless, non-existent or near-bankrupt firms. 

‘Boiler room’ refers to illegal offshore dealing rooms often located in Spain, Switzerland or the US.

Pyramid schemes and fraud recovery scams also netted 12,323 and 9,844 victims each over the past four years, earning fraudsters a respective £499million and £163million.

Pyramid schemes use unsustainable cross-selling business models that ensnare investors with the promise of high returns. Early investors are paid using the investments of new recruits, who eventually lose out when the system collapses.

Fraud recovery schemes see criminals pretend to be recovery agents. These fraudsters target fraud victims, claiming that they can apprehend the original fraudster for a fee.

Meanwhile, pension liberation fraud and time share and holiday club fraud also netted millions of pounds from victims during the period.

A massive £1.4billion was also lost by victims of ‘other’ investment fraud, which comes in the form of a wide range of schemes offering some form of profit in return for investment. 

According to the Home Office, this fraud often takes place at investment seminars, where unregulated investment products are mis-sold to victims.

These scams have ensnared 53,663 victims since 2020, the PMI said.

How to spot an investment scam 

Wakefield has the following advice for how to tell when you may be being lured into an investment scam. 

‘The cost-of-living crisis means investments scams are particularly prevalent as more people are tempted to try to find quick financial returns to help pay the bills,’ he said. 

‘Fraudsters will often lure people into scams with offers of quick financial gains or returns that are too good to be true.

‘Many scammers use sophisticated tactics to deceive their victims, and many people are simply unaware of the various scams. 

‘Some common scams include where fraudsters clone the websites of legitimate businesses or use social media to target people with fake investment opportunities, often impersonating celebrities. 

‘A lack of awareness regarding evolving scam techniques, such as those involving cryptocurrencies could also make people more vulnerable.’


Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *


Get our latest downloads and information first.
Complete the form below to subscribe to our weekly newsletter.

100% secure your website.