As the saying goes, if it sounds too good to be true, it probably is!
Scams can appear in many different forms, targeting both experienced investors and retail customers alike. They also come in many ways... from an unexpected phone call offering an investment opportunity, to an email encouraging you to buy shares that are about to go up in value based on ‘secret’ information. Alternatively, you might be encouraged to buy shares in a company you have never heard of, (often because it does not exist), or to invest in property, or a get-rich-quick scheme.
The calls often come from overseas, and while they promise above-average returns, those who invest usually end up losing their money. Be aware, these scams are also sometimes advertised in newspapers, magazines, or online as genuine investment opportunities.
The scammers are usually articulate individuals, who often pretend to be investment advisors or stockbrokers in order to entice your interest. The scammers are persistent and play on your emotions, making you feel like a fool if you refuse to invest. You will also often be told that you need to make a quick decision or you will miss out on the deal.
There are a number of steps you can take to protect yourself from becoming a victim of an investment scam:
- Reject cold calls. All calls should be treated with extreme caution, and the safest thing you can do is to hang up. Likewise, any emails that you receive of this nature should be deleted, whilst any letters, if they contain personal information, should be shredded.
- Check the Commission's warning list, to check out the firm and the investment it is offering. The warnings list may not include all firms that you should be cautious of, but it is a good starting point. You can also check the International Organization of Securities Commissions' (IOSCO) dedicated alerts portal called I-SCAN which includes warnings from regulators around the world to help combat investment fraud globally.
- Check the Regulated Entities page to make sure that the firm is regulated and permitted to give financial advice before you proceed, particularly if it is not licensed in the Bailiwick.
- Seek independent financial advice if you are unsure about an investment or financial product. Find out more information about the work of financial advisers (FAs).
It can't be stressed enough - if a proposition sounds too good to be true, it probably is!
Reporting a scam
Find out more information about how to report a scam.