How to spot an investor scam

By August 12, 2021For Angel Investors

Bure Valley Group is an investment introducer platform which links successful investors with exciting, innovative UK startups seeking funding. This content is for information purposes only and should not be taken as financial or investment advice. 

All of us have been presented with investment scams. One look at the spam folder in your inbox is usually all the proof you need. Yet, today, these activities have become increasingly elaborate with the rise of digital technologies such as social media ads, cryptocurrency scams and similar schemes. In this article, our investment team here at Bure Valley Group offers a summary of the most common types of scam since the COVID-19 pandemic broke out in March 2020. 

We hope you find this content useful. To find out more about our EIS and other investment opportunities, visit our portfolio page here. To enquire regarding our latest projects and funding (for investors and founders, respectively), you can reach us via:

+44 160 334 0827

 [email protected]

 

What are investment scams?

Simply put, when someone offers you a sham (but perhaps plausible) opportunity to generate a return, this typically qualifies for the “investment scam” label. There are three main types:

  • A fabricated investment opportunity which is a blatant lie (not real).
  • The investment opportunity is real but your money is stolen by the scammer along the process of paying for it.
  • A scammer poses as a representative from a legitimate group, business or organisation for deceitful purposes.

Defined like this, investment scams can take many forms. They can happen in-person, over the phone or online – involving a single person or multiple actors.

 

Investment scam “red flags”

How can you tell if an investment opportunity that comes your way is legitimate or not? It is not always easy to distinguish between them. However, some common warning signs include:

  • Unsolicited contact. If you receive an unexpected call, text message, email, social media message, brochure or other direct digital communication from a company or individual that you do not know, then it could be a scam.
  • High pressure. If the person you are speaking to about the investment is pressuring you to make a quick decision (perhaps citing limited time availability or discount period), then this is often a bad sign.
  • Harassment. Quite often, scammers will repeatedly try to contact you (e.g. by calling or by email) once they think they have a chance of getting you “across the line”. This might happen after an initial expression of interest by the target victim.
  • Grand promises. With an investment scam the risks are usually downplayed and returns are presented as high and near-guaranteed. In short, it sounds “too good to be true”.
  • Discretion request. If someone asks you to keep an investment opportunity quiet (e.g. “Don’t tell anyone else about this”) then that’s almost always a scam sign.
  • No registration. Legitimate companies offering good investments should be registered on the FCA website. Be mindful, however, that a scammer could pose as someone from a registered firm. So do your due diligence on the person to check they are the real deal.

 

Investment scams in 2021

With some of the common scamming tactics now in mind, what are the main types of scams that have been identified in 2021? These include:

  • Early pension release. Many scammers claim to be able to help you access benefits in your pension pot(s) before the age of 55 (“pension liberation”). This is a scam.
  • Foreign holiday properties. Sometimes people are offered the chance to invest overseas in a property – for a bargain price – but which transpires does not exist.
  • Non-regulated products. Not all unregulated products are scams. However, almost all scams are unregulated. Exercise extra care when speaking with someone about the likes of gold, diamonds, wine, bamboo, parking and student accommodation. 
  • Forex lures. If a trader is unauthorised then he/she may offer victims guaranteed returns and capture their attention and trust by giving them a small amount of initial profit.
  • Binary options. This is a murky area, since many legitimate investment platforms offer investors the chance to profit from betting on whether the price of an asset will go up or down (e.g. CFDs). However, binary options are also a common scamming tool. Be wary.

 

Methods for self-protection

How can you keep yourself safe from investment scams? Here are some methods to consider:

  • Filter “opportunities”. By screening out the types of “investment opportunities” described above, you already reduce your risk by a considerable amount.
  • Use a VPN. When connected to the internet the security of your connection is crucial – especially when dealing with your finances and investments. A legitimate VPN provider (virtual private network) adds an extra layer of encryption and protection here.
  • Avoid links. If you see a link in an email, social media message or other direct digital communication channel, think very carefully before clicking on it. This could take you to a fake website posing as a real company (e.g. your bank).
  • Check website addresses. If a website’s URL does not have an “https” prefix then this means the connection is not secure. Check for a green “padlock” symbol in your internet browser when visiting a website, as this signifies an encrypted connection.

 

Invitation

Interested in finding out more about the exciting startup projects we have on offer to investors here at Bure Valley Group? Get in touch today to start a conversation with our team and discuss some of the great investment memorandums we have available here:

+44 160 334 0827

 [email protected]