The FCA and Action Fraud have teamed up to warn consumers about cryptoasset and foreign exchange scams, which cost fraud victims more than £27m in the past year
Fraudsters are targeting cryptoasset and forex investors
Investment scams involving foreign exchange (forex) and crypto assets more than tripled last year in the UK, costing victims upwards of £27m in 2018/19.
The Financial Conduct Authority (FCA) – in partnership with the UK’s national reporting centre for fraud and cyber crime, Action Fraud – has issued a warning to members of the public to stay vigilant online and be alert to the actions of fraudsters.
More than 1,800 reports of forex and crypto-related investment scams were made to Action Fraud in the last year, up from 530 in the previous year.
The organisation’s director Pauline Smith said: “These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms.
“It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.
“Action Fraud is pleased to be partnering with the FCA to raise awareness of online trading scams, and we hope it will help prevent more people falling victim.”
On average, individuals targeted by these types of scams lost around £14,600 in the last year, after being tricked into “get rich quick” schemes promising high rewards on investment.
FCA wants to raise public awareness of cryptocurrency and foreign exchange investment scams
As part of its mandate to protect the integrity of the UK financial system and provide security to consumers, the FCA runs the ScamSmart campaign to provide information and guidance to the public on issues of economic fraud.
It will run new advertising on social media to highlight the signs and dangers of online investment scams, in the hope of making people more sceptical about the lucrative promises of quick profits promoted by fraudsters.
Many illegitimate investment platforms use fake celebrity endorsements and professional-looking websites to sell the dream of high returns on financial outlay.
Last year, prominent financial commentator Martin Lewis was one of those whose likeness was falsely used by fraudsters, resulting in him taking legal action against Facebook for publishing the ads, which was later settled out of court.
Customers are often led to believe their initial investment has been successful, and then encouraged to part with more money, or to introduce friends and family to the scheme.
Mark Steward, the FCA’s executive director of enforcement and market oversight, said: “We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms.
“Scammers can be very convincing, so always do your own research into any firm you are considering investing with, to make sure that they are the real deal.
“Before investing online, find out how to protect yourself from scams by visiting the ScamSmart website, and if in any doubt – don’t invest.”
FCA guidance includes being alert to professional looking websites and solicitations to invest, as well as taking necessary due diligence and reporting any experiences of scams or criminal activity to Action Fraud.
The regulator also keeps a public record of firms and individuals that are registered under its authority, and also has a searchable “warning list” which can be used to check if certain investment opportunities are known to be suspicious.