Investment scams can originate online, over the phone or in the post, and usually involve offers of worthless, overpriced or non-existent shares in unregulated products such as wine, diamonds or land.
The Financial Conduct Authority warns that over-55s are at greatest risk of investment fraud. These are high-loss scams with the average loss being over £32,000, according to Action Fraud. Around three-quarters of victims of investment fraud are men with the average age of 65. Those with savings of more than £10,000 are the most likely to fall victim to scammers.
Average age of victims
Victims who are men
Pension liberation scams target older people by offering to convert pension benefits to cash benefits. Victims pay high fees and often face tax bills as a result of such schemes. These scams have become particularly relevant since the 2015 changes to pensions access made it possible for a proportion of pensions to be withdrawn in cash.
The Pensions Regulator has published a leaflet warning about the signs of pension scams and giving five top tips on how to protect yourself. You can download it here.
Scammers usually cold-call but contact can also come by email, post, word of mouth or even at a seminar or exhibition. Callers may pretend they aren’t cold-calling you by referring to a brochure or an email they sent you – that’s why it’s important you know how to spot the other warning signs.
They can use various different tactics at different stages of the process:
The pre-caller will get in touch to obtain your personal details, by inviting you to complete a survey or offering to send you something in the post.
The opener will strike up a relationship with you, appearing friendly and knowledgeable, and make you feel special.
The loader will draw you in, offering you an investment opportunity that appears great.
The closer will pressure you into parting with your money by warning that the offer won’t be available again and that time is running out.
The recovery room: After you’ve lost your money, they’ll sell your details to a recovery firm, or pose as a separate firm, offering to help you get your money back for an upfront fee.