A new report by Barclays Bank shows a 66% rise in investment fraud over the first half of 2020 (compared to the last 6 months of 2019) as fraudsters took advantage of UK residents’ growing concerns over the ongoing recession, the potential of a no-deal Brexit and flatlining savings rates. Overseas companies duped both the young and old through a series of online trading scams, often promoted through targeted ads with fake celebrity endorsements, and with the threat of a second-wave lockdown on the horizon cases have reportedly spiked even further during the last few weeks.

In a survey by trade body ‘The Investment Association’, they report 300 victims losing approximately £4m in savings to fraudulent brokers this year and a whistleblower has recently leaked to the Guardian that over 200 fake “trader” companies operate out of the Ukraine alone.

Obviously when you are trading through any intermediary you run the risk of losing money through the fund’s poor investment decisions or their exorbitant management fees. However, what do you do when the fund you’ve trusted is losing your money on purpose? Here we look at a few telltale signs to spot a trading scammer so you can stop yourself from becoming another unwitting victim…

Too Good To Be True

Be suspicious of anyone promising high returns on your investment. Firstly, trading on any market carries risks that can only be partly offset by knowledge, experience and the correct strategies. No fund, however legitimate, can offer you a guaranteed return; use your common sense and don’t be lured astray by your greedier instincts.

Don’t Call Us, We’ll Call You

This may sound obvious but never trust anybody contacting you without you first requesting them to do so. It has never been easier for firms to target you on social media and search engines depending on your latest searches and profile interests. Just like you should always shred important paperwork, do an audit of what information you are making publicly available about yourself online – you don’t know who will come trawling.

Upping The Ante

According to the Guardian’s whistleblower, the trading scammers based in the Ukraine had dedicated ‘retention’ teams making 300 calls each per day and whose job (and commission) rested upon getting investors to put more cash in the hands of the firm. After you’ve invested in a trust you should not be being pressured to increase that investment; even under the guise of ‘a brand-new opportunity has just become available.’

Attack Of The Clones

The FCA has a comprehensive register of all the funds and firms it authorises and through which you have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) to possibly recoup some of your capital should things go wrong. However, one very common scam by unscrupulous brokers is to pretend to be a genuine FCA approved fund (a ‘clone firm’). When using the FCA register to check on the broker, make sure that you are also using the firm’s contact details listed there and not one provided by the potential scammer.

You Have Been Warned

Whilst we are talking about the FCA, they also operate a Warning List; this is a very useful tool to check on the risks of a potential investment opportunity. You can also use the search option to see if the firm contacting you has been flagged up before and is known to be trading without FCA permission.

Our House

Look up the fund on Companies House. All UK companies must register with this body and publicly file annual financial statements as well as their annual company returns. You’ll also find the names of the company’s directors which you can use to look up and see if they have been previously associated with any (now) infamous or dodgy companies in the past.

Learn To Trade For Yourself

Of course, the only guaranteed way to avoid being ripped off by investment funds, legitimate or not, is to learn to trade the markets for yourself. We have courses available to suit absolute beginners all the way up to practiced retail traders who are looking to improve the consistency of their trading returns through one-to-one mentorship with one of our experienced training coaches. If you’re completely new to the world of trading, why not sign up for our Learn To Trade Online 2-day introductory course – it’s completely free and a great way to get to know the basics!

If you have been the victim of a UK-based trading scam you can contact the FCA’s consumer helpline on 0800 111 6768 or by filling out a form on their website. If you have already been defrauded then please be aware that your details have likely been sold on to other criminals and you are now at an increased risk of being contacted by similar chancers. Please remain vigilant and exercise extreme caution.

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