How investment fraud could impact your business

Here’s a real-life example of the tactics employed by a fraudster.

Investment scams occur when fraudsters steal the money that you want to invest. They may come up with different opportunities to persuade you to part with your money, and it isn’t always a personal scam – in this instance a business took the hit.

Are you more likely to take a risk with a business account?

If you were playing a game like ‘Who wants to be a millionaire?’, using your own money, are you less likely to take the risk than if it were a business account? For smaller businesses, this may amount to the same risk but for larger ones it could resonate.

Our fraud specialist says that, as with romance scams  and other cases where relationships are strengthened gradually, an element of behavioural science creeps in.

There are common biases that impair our judgment once a fraudster has befriended us or put themselves in a position of authority, meaning we are far more likely to buy into their suggestions. “The relationship could be built on common interests or similarity or there could simply be a strong connection similar to the foundation of friendship,” he points out.

In this case study, the victim was introduced to three separate investment scenarios by the same ‘friend’. This friend had been building up the relationship for at least six months.

Investment fraud case study


Over the course of three months, the victim used online banking to make 11 payments totalling £490,000 to three separate bank accounts. All three accounts matched Confirmation of Payee, but the victim was referred to a chartered portfolio manager, who explained the risks of investing with non-regulated companies. The victim did not complete any other due diligence or seek independent advice.

Building a relationship: In all three cases the same trusted friend introduced the victim to the new ventures. In the first scam, this was six months before any request for money was made, helping to provide time for the victim and fraudster to meet face-to-face leading up to the transfer of funds. 

Scam 1: After six months the fraudster, who in this case worked in the media industry, asked for the first of a number of instalments adding up to £240,000 to be invested in several projects with a return of 40%. The victim’s friend said they had also invested. 

Scam 2: Next, the friend introduced the victim to someone supposedly working for an investment company who could make transactions on behalf of the victim. The fraudster showed the victim screen shots of how their trades were performing – they had invested £225,000 – but did not set them up with an account. The victim spoke to their accountant about investing but was advised that it was ok as long as monies were returned into the same account.

Scam 3: In this last scam, the victim was persuaded to send £25,000 to their friend’s personal account to take advantage of a short cryptocurrency trade offering a 20% return within a week. The victim became concerned when no funds were returned, and subsequently reported the scam to the bank.

When COP isn’t enough

Payments were made over a number of months so as to appear less urgent or suspicious but the fraudulent accounts in the case study were Confirmation of Payee (COP) matches, showing that this check alone can’t be relied on.

If COP does issue an alert when something isn’t an exact match, then account holders will usually be questioned. But fraudsters will coach people on what to say; they provide a perfectly legitimate reason why the bank transfer name is different from the one on the website visited.

“Even when we intervene, the customer might not be willing to listen; they’ve already been coached and they trust the fraudster,” says our specialist.

Cryptocurrency fraud is on the rise among criminals

The third scam taps into cryptocurrency investment scams , which is an area that has become more popular with cyber criminals. The crypto element is a complete lack of regulation. “Once money goes into that environment it’s very hard to identify it in the same way you would with the standard monetary system,” he says. It’s designed to be difficult to track individual transactions and it’s something the bank has seen more of in the last few years.

Criminals will always be watching to see the industry’s next move, which is why they’re so adept at responding and manipulating. As well as the usual approaches through email, phone calls or social media, they might host fake comparison sites, where it looks as though you found the investment yourself.

Don’t fall victim to an investment scam:

  • Always check that a business or an individual working for that business is listed on the Financial Services Register and use these details to contact the business.
  • If you’re considering an investment opportunity, use the FCA to find a regulated independent financial adviser.


Visit our Fraud Hub  for upcoming webinars and practical tips for protecting yourself and your business from falling victim to fraud.

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of NatWest Group, as of this date and are subject to change without notice. Copyright © NatWest Group. All rights reserved.

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