If it’s too good to be true…how to spot a scam

Posted by Adrian Lowcock in Portfolio management category on 12 Mar 19

Over the weekend there were a number of articles in the mainstream press highlighting a financial scam involving a company called London Capital & Finance.

On the surface everything looked legitimate. Investors thought they were using a reputable company which was authorised and regulated by the Financial Conduct Authority. They were investing in an ISA - a well-known financial product. Sadly the company was not authorised to sell ISAs. The investments marketed don’t appear to have reflected the risks involved with the possibility of fraudulent activity within the company as well. As such investors could possibly lose all the money they invested with the company.

Scams can be hugely damaging to peoples’ finances and potentially their health. There are some simple steps you can take which can help you spot a scam and avoid being caught out:-

If it is too good to be true then it probably is. These words are worth bearing in mind whenever you see a new investment opportunity. Always be suspicious and don’t be afraid to walk away.

Treat all unexpected calls, emails and text messages with caution. Do not assume they are genuine, even if the person seems to know a lot about you. If you don’t know the company then feel free to hang up, or delete the messages.

Never be pressured into acting quickly. The sales techniques of scammers usually get more and more aggressive if you want to take time to think about the investment. They are concerned you might talk to a friend or relative. It is your money and you have worked hard for it. Don’t let it out of your hands too quickly. If you need to take time to be comfortable with an investment opportunity then any genuine financial services company will not mind waiting.

Make sure the company is FCA-authorised. You can check the FCA register of authorised companies and report any company you are suspicious about. Always access the Register from their website, rather than through links in emails or on a firm’s website (as that might be part of the scam).

Always check email addresses and websites – A common approach (known as phishing) is to use email addresses, branding and websites that look like they come from a well-known, genuine company. They will try and get some financial details from you such as a PIN number or account number. Genuine companies do not ask for such sensitive information via the website or email. If in doubt, always contact the company on their official website to check the communications are genuine.

Speak to friends and family – Fraudsters do not like you to speak to anyone else as they could expose the scam for what it is, but spending a few minutes discussing the investment with someone you do trust could save you thousands of pounds.

Scams are an unfortunate fact of life and those involved are often very clever and highly motivated so are constantly looking for ways to separate you from your hard earned money. So remember if something is too good to be true, it probably is.