Investment scams – what they are and how to spot them

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Investment scams on the rise

Investment scams aren’t new, but people are being caught out by them more than ever before. Here at PDL, we’ve noticed an increase in clients looking for help from our fraud investigation services, either because they fear they may have fallen victim to a scam or because they suspect an investment they’re being encouraged to make may not be entirely what it seems.

This rise in demand for the services our team of expert financial fraud investigators provide is not entirely unexpected – given the turbulent economic environment of recent years, as well as the ongoing effects of the pandemic.  The clients we see have all been keen to maximise their earnings and, in some cases, have already invested (or lent,) significant sums of money before carrying out any checks on the individuals or company involved.


What is an investment scam?

Financial fraud comes in all shapes and sizes, with phishing and tech support scams at one end of the scale and investment scams, for example pyramid schemes or so-called boiler room scams at the other. 

Although the details may vary, most scams of this kind involve the scammer convincing would-be investors to part with cash for products or schemes that either don’t exist or are essentially worthless.

The criminals carrying out these frauds will usually maintain a sustained campaign of contact with their victims, nurturing the relationship and building trust, before abruptly breaking all contact once a financial transaction has been made.

All of these scams exploit the vulnerabilities that make us human – whether that’s a desire to provide for our families, or simply wanting to ensure a comfortable retirement. 

Official statistics show that in 2021 more than £1.3bn was stolen by fraudsters*. This is a tremendous amount of money, and evidence from financial investigation services points to investment scams as the second most common type of scam, second only to impersonation scams. 

Investment scams

Our financial fraud investigation services

Like other types of criminal behaviour, anyone can find themselves targeted by financial scammers – not just those who might be considered vulnerable or lacking in street smarts. In fact, as these criminals grow in both confidence and sophistication, even people who are experienced investors and aware of the risks are finding themselves getting caught out.  

The majority of our clients come to us because they have a sense that something isn’t quite right: “It seems great, but something feels a little ‘off’” is something we hear often. 

Our clients don’t want to risk missing out on a potentially profitable opportunity, but they also want to be 100% certain of its legitimacy before making a commitment.  We look into the matter for them, identifying any issues or concerns.

If you have any doubts, taking the time to carry out some due diligence before moving forward with a new financial venture is always the best way to avoid falling victim to criminal activity.

If you’re worried you’ve already been the victim of a bogus scheme, a private detective agency such as PDL can look into the details for you.  But a preventative approach – carrying out appropriate due diligence checks before making new investment decisions is always more effective. 

So, the question is, how can you avoid investment fraud?


How to spot investment fraud

  • Question unexpected contact. Financial fraud investigators usually notice a familiar pattern: scammers get in touch with their victims out of the blue, usually with an opportunity they claim to be sharing because “it’s just too good to miss out on”. If you’ve been cold-called or received an unexpected email outlining a fantastic opportunity, always check whether it’s legitimate before handing over any money.
  • Say no to pressure. Another common tactic scammers use is to pile on the pressure. You may be told what they’re offering is time limited or even “one time only”. There may be a very short deadline, or sometimes bonus or discount incentives are offered for getting involved quickly. A legitimate investment opportunity will never be marketed in this way. You should always question any so-called opportunity that makes you feel pressured or uncomfortable.
  • A new best friend. A frequent finding in financial fraud investigations is the lengths criminals will go to to get their victims to commit. Common tactics include prolonged and frequent contact, bombarding the intended ‘investor’ with unsolicited phone calls, email and text follow-ups. In some instances, the relationship may seem more like that of a friend rather than someone trying to make a business deal. This should always be considered a red flag.
  • Confusing terms, jargon, and returns that are too good to be true. All these things should be concerning if you want to invest your money. You should always understand exactly what you’re investing in and using regulated firms or individuals is advisable.

Get in touch if you’re concerned about anything we’ve covered in this article. We’ll provide free, honest, ethical, legally–sound advice with no obligation.


*as reported in the Guardian, 29 June 2022

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