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Over £27 million lost to Bitcoin and other investment scams

Almost £74,000 was lost every day to ‘get rich quick’ schemes and bogus online trading platforms in the last financial year, according to new figures.

People are often conned into investing in foreign exchange (forex) and cryptocurrency scams on social media through fake celebrity endorsements, the Financial Conduct Authority (FCA) and Action Fraud reveal.

More than 1,800 people reported that they lost money to investment and trading scams – triple the amount seen the year before. On average, victims lost £14,600 each, with a total loss of £27 million in 2018-19.

What are cryptocurrencies?

Cryptocurrencies are digital peer-to-peer currencies that only exist online and are not controlled by a bank, treasury or country. Bitcoin is the most famous one, but there are thousands of others out there – Ethereum and Litecoin are other well known versions.

Cryptocurrencies are also anonymous, which is why they are popular amongst scammers as the transaction can’t be traced back to one person.

How do cryptocurrency scams work?

Fraudsters often use social media to promote their ‘get rich quick’ online trading platforms. Often they will include photos of fake celebrity endorsements and expensive items such as luxury cars or watches. Posts will include a link to a professional-looking website where consumers are then persuaded to invest.

Scammers will convince the victim that their first investment went well and encourage them to invest more money and introduce their friends and family to the scheme – all with the promise of greater returns.

However, eventually the returns stop, the victims account is closed and the scammer vanishes, along with the victims money and makes no further contact.

The FCA is raising awareness of these scams and is urging people to be more sceptical about them as part of it’s ScamSmart campaign.

How to avoid cryptocurrency scams

It’s important to be wary of anything that seems too good to be true, especially if you are contacted out of the blue about the investment.

The FCA has come up with some tips to help you avoid losing any money to cryptocurrency scammers:

1. Don’t assume it’s real

A professional looking website, advert or social media post doesn’t always mean that an investment opportunity is legitimate. Scammers often use the names of well-known brands or individuals to make their scams  seem genuine.

2. Stay in control

If you’re thinking about making an investment, it’s important to do your research.

If someone calls you, take their details and call them back. That way you can thoroughly research the company first. You can also check the FCA’s warning list to see if it’s a potential scam.

It may also be a good idea to speak to someone you trust for a second opinion before handing over money.

3. Do the right checks

Companies that provide regulated investments need to be registered with the FCA, so you can check the FCA register online to check if the firm is genuine and whether there are any warnings about it.

Use the contact details on the register, not the details the firm gives you to avoid ‘clones’.

If you come across a dodgy investment scam, make sure you report it to Action Fraud.

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