How the cyber scammers suck you in

Enticing adverts, copycat websites, phoney market tips...

PENSION cons are not the only way fraudsters can now steal your investments in an instant. The pandemic has seen a rise in sophisticated scams targeted at investors looking to make their money go further.

Industry body UK Finance says British savers lost £55.2 million to such scams in the first half of 2020 — more than twice as much as two years ago.

Barclays has seen investment scams rocket by 50pc in the first half of year. Meanwhile, UK Finance says the number of payments made by victims increased by a third compared with last year, prompting fears criminals may initially pay out returns to convince victims to pour in even greater sums.

Of course, investment scams are nothing new. But with more of us managing our money online, swindlers are finding new ways to cheat us.

They often look to tempt savers — including pensioners dependent on their nest egg for income — away from rock-bottom savings accounts by offering supposedly marketbeating returns.

After the phenomenal rise of Bitcoin (the internet-based currency intended as an inflation-proof storage of value), fraudsters have been quick to tempt amateur investors looking for the next big thing.

Last year, savers lost more than £20 million to crypto-currency-related scams, having been duped into buying worthless imitation ‘currencies’ or entering into highly speculative investments.

But it isn’t just crypto-currencies. In recent years, swindlers have touted enticingsounding investment schemes — everything from holiday resorts to stockpiling graphene (claimed to be an environmentally-friendly wonder material-in-waiting).

Money Mail has also reported how criminals pose as legitimate investment companies, setting up fake websites and convincing call centres to cajole victims.

WEB OF DECEIT

DESPITE repeated warnings from the authorities, some of the most prolific scams are still open for business, popping up again on the internet almost as quickly as they’re closed down.

Victims are typically lured in by online adverts (including on social media) promising high returns for those who get ahead of the curve.

These fake firms even pay for priority advertising in Google, meaning their websites can appear near the top of a search page — catching those looking for the real deal. Consumer group Which? says fraudsters target internet users searching for terms such as ‘top Isa’ and ‘best bonds’.

The adverts often use false endorsements from celebrities and business figures. They may also claim to come from legitimate companies. Ryanair boss Michael O’Leary took legal action when he found himself the face of a crypto-currency scam, despite having publicly criticised Bitcoin as foolish speculation.

Other ads feature testimonies from members of the public who’ve purportedly received eye-watering returns. But these are as false as the celebrity ones, with many of the photos stolen from social media.

Investment firm Quilter is now calling on the Government to tackle scam adverts as part of its Online Harms Bill, which will hold social media giants liable for dangerous content on their platforms.

THE WRONG CALL

HAVING seen the adverts, victims are then lured onto professionallooking websites, often purporting to come from companies based in London’s financial district. Would-be investors are asked to share their telephone number, after which they are contacted by scammers directly.

A common tactic is to persuade victims to make a small tester payment, and then dupe them into thinking this initial investment has been successful. Victims are then tricked into handing over a bigger chunk of their savings — money which they are unlikely to see again.

But the Financial Conduct Authority (FCA) is fighting back.

Last year the regulator took legal action against a wave of unregulated schemes promising market-beating returns to savers investing in airport parking spaces. Rather than savvy investors, the scheme targeted everyday savers, with an entry requirement of just £20,000. The scammers trousered more than £200million.

Even taking the pitch at face value, this is a risky investment. When you’re lending money directly to an unlisted company, it’s notoriously difficult to get back what you’ve put in. Unlike with a stock exchange, there’s no third-party mechanism for selling your shares; nor is the company under any obligation to refund you if you change your mind.

HIDDEN RISKS

MANY scammers are able to operate as legitimate companies as what they’re offering isn’t entirely bogus; it’s just overhyped.

In many ways, falling for this kind of fraud is even worse than the outright fakes. The fact you technically got what you paid for — even if you didn’t realise it was worthless — makes it difficult to harness consumer protections.

Last year, the FCA banned the marketing to retail investors of ‘binary options’ — speculative contracts in which investors make ‘all or nothing’ bets on the movements of a particular asset. The overwhelming majority of investors (many of them young and inexperienced) were losing their cash to dodgy brokerages which downplayed the risk.

Yet a string of companies in other European countries — most notably in Cyprus — continue to push these risky bets by advertising on UK websites, using tactics to convince British savers they’re above board. Cyprus-based ET Finance (slammed by the FCA for misleading investors) proudly announces on its website that it sponsors Real Madrid — presumably to assure would-be customers of its credibility. Yet the firm is actually a second-tier sponsor of the Real Madrid basketball team, not the legendary football club.

UNDER PRESSURE

WHAT these dangerous scams have in common is the pressure they place on potential customers. Victims are almost always phoned by the scammers — either through an initial cold-call or having handed over their number — and told to move quickly or risk missing out. UK Finance’s Take Five To Stop Fraud campaign urges anyone thinking about an investment opportunity to do their homework first. It says savers should be particularly suspicious about anything presented as a ‘time

limited’ opportunity. As the old saying goes: act in haste and repent at leisure.

WHAT IF I’M DUPED?

IF YOU think you’ve fallen for a pension or investment scam, you need to contact your provider or bank as soon as possible; it may still be able to stop the transfer.

Be aware there’s no guarantee you’ll get anything back. This is particularly difficult with so-called ‘authorised fraud’, where you’ve approved the transfer yourself.

In assessing whether you qualify for a refund, banks will look at whether you paid attention to any warnings. They must also assess whether had a ‘reasonable basis’ to belyou the service was legitimate. If you fell for an impersonation scam (where criminals pretend to be well-known companies), you may qualify.

Banks also have an obligation to protect ‘vulnerable’ customers: one older, unwell or recently bereaved. If this applies to you, make sure they know.

Lastly, make sure you report every the thing that has happened to the police and to Action Fraud, Government’s dedicated watch dog.