Fake investments and cryptocurrency scams on the rise as fraudsters take advantage of cost of living crisis

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Investments that appear too good to be true may be a scam waiting to happen, as figures shows that the number of fake investment opportunities has risen in the last year.

A growing number of investment scams involve cryptocurrencies such as Bitcoin in some capacity as criminals aim to take advantage of the cost of living crisis, the latest complaints data from the Financial Ombudsman Service (FOS) show.

Scams often involve someone being persuaded to buy cryptocurrency through a legitimate intermediary and then sending money to what they believe is a genuine investment platform, which is in reality operated by fraudsters.

In cases of investment fraud, the FOS said it has seen examples of consumers being scammed out of tens or even hundreds of thousands of pounds.

The ombudsman said that it received 570 complaints from customers about investment fraud, making up 30 per cent of its total complaints volume in the first quarter of the financial year. This is up from 500 complaints, or 21 per cent, last year.

The FOS upheld around 60 per cent of investment fraud complaints in consumers’ favour between April and June this year.

Other scams appear to be dropping off in popularity, according to the FOS data: impersonation scams, which include so-called “safe account” fraud, accounted for 627 complaints, or 33 per cent of customer queries, while those involving missing goods remained consistent with last year’s figures at 25 per cent of total complaints.

Nausicaa Delfas, interim chief executive and chief ombudsman at the FOS, said: “We are concerned that, in current economic circumstances, people could be tempted to invest in fake investments.

“Our advice to consumers is be wary, conduct their own research, check the FCA register and contact the firm directly on the number listed.

“If people feel they have been treated unfairly by their bank, they should contact the Financial Ombudsman Service, and we will see whether we can help.”

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Rocio Concha, Which?’s director of policy and advocacy, said that fraudsters would be even more active in the current economic climate.

“Fraudsters are constantly refining their tactics in order to trick us into sending them money – and will often use events, like the cost of living crisis, to help them,” she said.

“With millions of consumers seeing their budgets squeezed by rising prices, and with currently no savings account matching the rate of inflation, many will turn to alternative means in order to gain better returns on investment. Unfortunately, that often means falling into the hands of scammers, who are able to flood social media with paid-for advertising to promote bogus investment scams promising high returns.”

Ms Concha also urged the government to pass the Online Safety Bill to put the onus on tech platform operators to police the content published by their users.

Separate data collated earlier this year by TSB found that almost one in every five transfers that the bank’s customers were making to cryptocurrency transfers were being reported as fraud.

It led to TSB deciding to the ability for customers to make cryptocurrency transfers as a way to protect them.