Crypto, Forex Scams Cost U.K. Investors $34 Million - FCA
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(Kitco News) - Scams in crypto assets and the foreign-exchange market tripled last year and cost U.K. investors over £27 million ($34 million) during 2018-19, the U.K. Financial Conduct Authority and reporting service Action Fraud said Tuesday.
Victims lost an average of over £14,600 during the last financial year, with more than 1,800 scam reports, the FCA said. Authorities issued a warning for investors to be wary of “bogus” online trading platforms.
“These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms,” said Pauline Smith, director of Action Fraud. “It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.”
Fraudsters often use social media to promote “get-rich-quick” online trading platforms, authorities said. In particular, they often use fake celebrity endorsements and images of luxury items, like expensive watches and cars, then link to professional-looking websites that persuade consumers to invest.
Often, the FCS and Action Fraud said, scammers will lead investors to believe they have made a profit. Fraudsters then contact the victim to encourage him or her to invest even more and bring in friends and relatives with the promise of great profits. However, authorities said, eventually the so-called returns stop, the customer account is closed and the scammer disappears with no further contact.
The FCA plans to run a ScamSmart campaign to educate the public about trading scams. The campaign will appear on social media, warning consumers to be wary of “get-rich-quick” trading.
“We’re warning the public to be suspicious of [advertisements] which promise high returns from online trading platforms,” said Mark Steward, executive director of enforcement and market oversight at the FCA.
“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.”
Authorities encouraged the public to “don’t assume it’s real,” commenting that professional-looking websites and social media posts don’t always mean that an investment opportunity is genuine. They also urged the public to avoid “uninvited investment offers” made either through social media or over the telephone.
In the U.K., they pointed out, firms providing regulated financial services must be authorized by the FCA. Thus, investors can check whether firms are authorized on the FCA’s Register. Officials said investors should pay attention to the contact details on the Register, not the details the firm gives them, in order to avoid “clones.”