Could you spot investment fraud?

What are the most common fraud and security threats of the moment? Knowing the answer to this, and knowing how to spot these threats is key to keeping your business safe.

That’s why we’re running a series of posts about the most prevalent threats and scams that we’re seeing at present.

A real example of investment fraud

A customer was seeking an investment opportunity and registered with an online agent who specialises in cryptocurrency investment.

They were contacted by the agent, who informed them about investing funds in Bitcoin. The customer thought that the rewards looked encouraging and deposited £25,000 of their personal funds into an online wallet, which the agent said would be used to purchase a certain number of Bitcoins.

The investment terms meant they wouldn’t receive any pay outs for at least 12 months. Over the next few weeks, the agent told the customer that their investments had increased in value to £60,000. Keen to capitalise on this increase, they continued to pay in funds, this time from their business accounts, totalling £250,000.

By the time the 12-month period was up, all contact from the online agent had ceased. When the customer tried to get in touch, they found that telephone numbers were disconnected, emails were ignored, communication records had been deleted, and all funds had been withdrawn by the fraudsters months before.

What is investment fraud and how does it work?

Fraudsters will pose as someone from an investment organisation, offering investment opportunities that promise high returns. However, these tempting opportunities are scams, and the schemes offered are worthless or don’t exist.

Fraudsters have recently been contacting businesses with cryptocurrency investment opportunities, due to the success of currencies such as Bitcoin and Ethereum. They’ll often be financially knowledgeable with credible-looking websites and testimonials. This makes them hard to distinguish from legitimate investment opportunities.

While cryptocurrency-based scams are increasingly common, they’re not the only type of investment fraud out there. Fraudsters could contact you with a range of bogus investment opportunities. They’ll often send convincing looking emails that are clones of well-known investment organisations.

“Make sure to think twice. If an investment opportunity appears too good to be true, it probably isn’t true.” - James Turley, Fraud Awareness Analyst, NatWest

What can you do to protect your business?

The best way to protect yourself is to be alert and know the warning signs to look out for:

  • Always verify investment opportunities with an independent source. Don’t feel pressured into making a snap decision. Seek independent financial and legal advice before you commit to an investment.
  • Be wary of unsolicited investment phone calls or emails, even if they seem to be giving you details you think only a genuine investment company would have. Fraudsters make it their business to know about you before they make contact.
  • These opportunities can be presented initially as personal investments. The victim is then encouraged to invest further, which may mean risking business funds.
  • Be wary of ‘time limited offers’. It may be a trick to make you act quickly, without having the chance to research.
  • Visit the FCA ScamSmart website for further advice on how to spot the techniques used by fraudsters.
  • Find out more about investment fraud in our security centre

Final thoughts

We hope you found this useful. Please do share this information, as the more people who know what to look out for the better. Collectively we can beat the fraudsters!

Next time, we’ll be posting about invoice redirection, and how to fight it.

You can visit our security centre or join a free webinar to find out more about common threats and settings in Bankline that could help protect your business. You can also explore the advice and resources of our security partner, the National Cyber Security Centre.

Visit the Bankline security centre

Sign up for a fraud awareness webinar

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