With more Brits turning to investing to build their savings and plan for the future, fraudsters are finding new ways to exploit this interest. Investment scams in the UK are now among the most common types of consumer scams, with Action Fraud reporting that victims lost over £890 million to investment fraud in 2023 alone.
That’s why brokers and trading experts at DayTrading.com have revealed some of the most prominent investment scams affecting British consumers right now, highlighting key red flags to look out for.
Investment scams often begin with a phone call, email, or social media message offering an exciting “once-in-a-lifetime” opportunity, often promising guaranteed returns, little risk, and fast results. Fraudsters frequently impersonate legitimate financial institutions, registered brokers, or government-backed investment schemes to gain trust.
Common investment scams often come with warning signs that indicate to consumers that they should avoid them. If you can identify these signs, you can take steps to protect yourself.
Fake brokers and wealth manager scams
Scammers may pose as professional brokers or financial advisers, often using cloned websites or fake registration numbers to appear legitimate. They might offer shares in well-known companies or access to exclusive financial products.
A red flag of these types of scams includes high-pressure tactics urging you to invest quickly. Scammers often use urgency as a manipulation tactic and may claim that an investment opportunity is only available for a short time, or that the offer is exclusive and will expire soon. They’ll push you to “act now” or risk missing out.
This is designed to stop you from doing proper research or seeking independent advice. Legitimate investment firms will give you time to think things through and will never pressure you into making quick decisions. If a company seems to be coercing you into making a snap judgement and investing as soon as possible, it is probably a scam.
Another red flag is the lack of a clear or verifiable company address. A genuine, regulated financial firm should have a registered office address that can be easily found and verified. Scammers may either provide vague details or use fake addresses that lead nowhere. Some will use a real company’s name but change the contact information.
Always cross-check the company’s details on the Financial Conduct Authority (FCA) register and avoid dealing with firms that won’t clearly provide their physical address or are reluctant to share basic company information.
Additionally, if a company is asking for payment into personal or overseas bank accounts, this is a major red flag. These make it difficult to trace the funds or recover them if something goes wrong. Reputable firms will only ask you to transfer money to a business account in the company’s name, usually held at a UK-regulated bank. Be especially cautious if they request unusual payment methods such as cryptocurrency wallets, prepaid debit cards, or wire transfers.
Cryptocurrency and trading platform scams
Crypto-related scams are particularly common, often involving fraudulent trading platforms that promise huge profits from small investments. Once you deposit money, you may see fake returns on a dashboard, but when you try to withdraw funds, communication stops, or additional fees are demanded.
A major warning sign of these scams is unregulated trading platforms. Scammers often promote flashy online trading platforms that claim to offer access to forex, crypto, or stocks with minimal effort. While these sites may look professional, many are completely unregulated, meaning they operate without oversight and can disappear at any time alongside your money.
These platforms often fabricate your account balance to make it look like you’re earning profits, but when you try to withdraw, you’re blocked or asked to pay unexpected fees. Always check whether a trading platform is authorised on the FCA Register, as if it’s not regulated in the UK, it’s likely unsafe.
Another common tactic used in crypto and trading scams is unsolicited contact through social media platforms like Instagram, TikTok, Facebook, or messaging apps like WhatsApp. Scammers often pose as successful traders, influencers, or even attractive individuals looking to build a relationship.
These messages often include promises of “insider tips,” trading signals, or investment opportunities. If someone you don’t know reaches out to you out of the blue with investment advice or a money-making scheme, it’s almost certainly a scam.
Similarly, in some crypto scams, fraudsters will ask you to install remote desktop software under the pretence of helping you set up your trading account, manage your investments, or complete a payment. Once installed, they can take control of your device, access banking details, passwords, and transfer funds without your permission.
Never give anyone remote access to your phone or computer unless you’re absolutely sure they are from a legitimate, verified source. No genuine investment firm will require remote access to process your transactions.
Investment by nature always involves risk, if a company is promising guaranteed returns, it’s probably a scam. Scammers frequently use phrases like “risk-free,” “100% guaranteed,” or “you can’t lose” to lure people into handing over their money, and this can be another major red flag of crypto scams. They may even show fake testimonials or account screenshots to build credibility. Be suspicious of any offer that seems too good to be true.
Bond and fixed-income investment scams
These scams involve fake or cloned bonds claiming to offer fixed, above-average interest rates. Victims are often older investors seeking stable, low-risk options, and are sometimes contacted after entering details into “investment comparison” websites.
One common scam involves fraudsters promoting fake or “cloned” bonds supposedly issued by well-known banks, insurers, or asset managers. These scam bonds are often advertised with attractive interest rates that seem slightly better than average, making them look credible and appealing to cautious investors.
However, if the bond isn’t listed on the issuing institution’s official website or cannot be verified via trusted sources like the FCA Register, it’s likely fraudulent. Scammers frequently copy the branding and names of real financial firms but use their own contact details and fake documentation.
Additionally, scam bond providers often reassure potential victims and attempt to build trust by falsely claiming their investments are protected by the Financial Services Compensation Scheme (FSCS) in the instance that the firm fails. However, FSCS protection only applies to specific products and firms that are properly authorised by the FCA. Be sure to check whether a specific investment is eligible for FSCS protection by visiting their website or calling their helpline.
Another red flag is receiving a phone call, email, or message out of the blue promoting a bond or fixed-income investment. It is illegal for firms to cold-call about pensions and investment products in most circumstances, yet many scams begin this way. This often starts with a “representative” offering limited-time deals, exclusive access to private placements, or “corporate bonds” not available to the general public. Always treat unsolicited investment offers as a major warning sign.
Pension and ISA scams
Fraudsters target savers by offering to transfer pensions or ISAs into high-yield investments that are often too good to be true. These are frequently based offshore or in high-risk, unregulated schemes.
One of the biggest red flags in pension scams is any offer to help you “unlock” or access your pension savings before the age of 55 (except in very rare circumstances, such as terminal illness). Scammers often promote early pension release as a legal loophole, claiming you can withdraw your pension and reinvest it elsewhere for better returns.
Be aware that accessing your pension before 55 is almost always illegal and can result in heavy tax penalties from HMRC. In many cases, the scammers will also charge high fees or simply steal the money.
Another warning sign is scammers posing as financial advisers and claiming to be calling from overseas offices or international investment firms. They’ll often speak with confidence and use financial jargon to sound legitimate, but they usually operate from unregulated jurisdictions where UK law does not apply.
These advisers may also pressure you into transferring your pension into high-risk, offshore schemes that are unregulated and nearly impossible to recover money from once invested. Be especially wary of anyone unwilling to provide an FCA registration number or who dismisses your concerns about regulation.
Finally, legitimate pension transfers, investments, and ISA products must come with a cooling-off period, during which you have the legal right to cancel or withdraw without penalties. Scammers often skip this entirely or tell you that the investment is “final” or “non-refundable.” They may also try to rush you into a decision before you’ve had time to consider it fully.
Being told there’s no way to cancel once you sign up, or being discouraged from reading the small print, is a major warning sign. Always ensure you’re given time to review terms and conditions and confirm that a cooling-off period is clearly included in any documentation you receive.
Tobias Robinson, CEO of DayTrading.com, commented,
“The FCA and consumer protection bodies urge anyone looking to invest should stay vigilant and proceed with caution, as scams have the potential to seriously impact your finances if you’re unlucky enough to be targeted by one.
Hopefully, these tips will provide you with the tools to identify scams yourself and mitigate their potential effects. If you’re in doubt, always check with a third party, and don’t invest unless you’re positive of what you’re investing in.
If you think you’ve been scammed, immediately cease all contact with the suspected scammer. Make sure you report the scam to Action Fraud, either online or through their helpline, and contact your bank immediately to try to freeze or recover funds. Report to the FCA if the scam relates to financial services, and if your pension is involved, contact The Pensions Advisory Service.
As fraudsters continue to evolve their tactics, staying informed is your best defence. Always double-check investment opportunities, avoid high-pressure sales tactics, and never be afraid to say no. If something doesn’t feel right, it probably isn’t.”
