How to spot and avoid investment scams

Investment scams are becoming more sophisticated, convincing, and frequent than ever before. Whether you’re planning for retirement, exploring online opportunities, or tempted by what appears to be a quick win on social media, protecting your wealth from an investment scam needs caution and awareness. Scammers are constantly adjusting their tactics, making it important for you to know how to identify and avoid these schemes.

An investment scam is a fraud that happens when you are tricked into investing your money. In only the first half of 2024, people in the UK lost over £56 million to investment scams¹. Worldwide, it is reported that scammers stole more than $1 trillion in just one year². The real figure is likely far higher, with many victims never coming forward.

Why do investment scams work?

Scammers are clever and they know how to make things look real – from websites and documents to emails and adverts. It’s likely that they will claim they’re from a trusted company or show fake approval from the Financial Conduct Authority (FCA), making it even harder to identify.

Many investment scams begin with smooth talking salesmen or introducers who try to convince you and other unsuspecting consumers to part with hard-earned money. These individuals often present themselves as trusted experts, offering exclusive, time sensitive opportunities that seem too good to pass up. They may exaggerate potential returns, downplay risks and create a false sense of urgency to pressure you into making quick decisions. They could even use the names of well-known celebrities or financial experts to attempt to gain your trust. In most cases, they operate without proper regulation, meaning that they have no culpability if an investment goes wrong.

This approach is known as ‘social engineering’, which is a method used by criminals to manipulate the human tendency to trust others, and to get you to act before you’ve had time to properly think it through.

A few common types of investment scams on the rise include:

• Pension scams: Fraudsters might offer early pension access, upfront cash, or ‘free reviews’, encouraging you to transfer your pension into unregulated or fake schemes.
• Cryptocurrency scams: Promises of quick, high returns if you invest into fake crypto platforms or wallets.
• Foreign exchange trading: You’re encouraged to trade in foreign currency through an unregulated company.
• Unregulated investments: These often involve obscure, high-risk assets and aren’t approved by the FCA (loan notes for example).
• Clone firm scams: Where criminals will copy the credentials of real, FCA-authorised firms to trick investors into thinking they are legitimate.
• Fake bonds: You’re promised high returns from bond investments that don’t exist. These often appear to be backed by the government or reputable companies.
• Property and housing schemes: Scammers offer you the chance to invest in property, promising high returns or exclusive opportunities.

The best way to protect yourself from an investment scam is to fully understand the signs to look out for. More than a third of all investment scams start on social media³. Scammers often use WhatsApp, Facebook, and Instagram. They may also use fake celebrity endorsements, for example Money Savings Expert Martin Lewis, to capture your attention and gain your trust. You may also be referred an investment by a friend, family member or colleague who have themselves invested and believe this to be legitimate, when in fact they have also fallen victim to a scammer’s charm.

Red flags to watch out for:

• Promises of high returns with little or no risk
• Pressure to act quickly or miss out
• Anything that sounds too good to be true
• Offers that are ‘just for you’
• Adverts found through search engines or social media
• Endorsements from celebrities or influencers
• Recommendations from friends and family
• Cold calls from ‘introducers’ offering investment advice
• Difficulty withdrawing funds
• Unregulated investment offers with deals that lack transparency

How to protect yourself

• Take your time – don’t rush into anything
• Conduct your own in-depth independent research
• Talk to someone you trust (who has not also invested) before making any decisions
• Listen to your gut – if something feels off or too good to be true, walk away · Check the FCA’s Warning List and register to see if the company is regulated or not
• Say no if you’re unsure – it’s okay to push back. If you are speaking to a genuine professional, they won’t be offended by this
• Feel free to ask challenging questions. If they become hostile they are probably in it for financial gain themselves
• Work with trusted financial institutions that prioritise compliance and transparency

What to do if you suspect fraud:

If an investment sounds too good to be true, it probably is. Always double-check and get advice before parting with your money.

If you think you have fallen victim to one of these scams you should immediately take the following actions:

• Stop any further transactions to the individual or company
• Gather evidence of your communication with the provider
• Notify your private banker straight away
• Report the fraud to financial regulators and authorities
• Consider getting legal advice
• Review your finances to make sure your wider wealth is not at risk

You should also remember that it’s nothing to be embarrassed about – fraudsters are very clever with their tactics.

Investment fraud can be devastating but swift and informed action can limit the damage and improve your chances of recovering any funds lost. Staying vigilant and performing thorough due diligence will help protect your wealth against future scams

Real life example: The Guy Flintham case

In May 2024, Guy Flintham from the UK, was sentenced to six years in prison for running an unauthorised investment scheme that lost over 240 people around £19 million. Over a five-year period, he claimed to be a successful trader, providing falsified trading statements, but instead ran a Ponzi scheme – using money from new investors to pay fake returns to others. Most of the funds were never invested and were instead used to fund his personal lifestyle. In January 2025, the FCA secured a £5.9million confiscation order against Mr Flintham, which will be distributed to the victims in this case. He is now serving a six-year jail sentence.

As a valued client, we are committed to safeguarding your financial future. If you ever think you have been targeted by a fraudster, please don’t hesitate to reach out to your private banker or our client services centre who can freeze your account to stop further unauthorised transactions while they investigate what has happened.

Nedbank Private Wealth clients can contact us at +44 (0)1624 645000 (Monday to Friday, 8am to 8pm UK time, except for UK public holidays) or +44 (0)20 8167 3223 outside these hours.

For more tips and advice, visit our Protect Yourself from Fraud page.

References

¹What is investment fraud and what can victims of scams do to get help? | Scams | The Guardian

²International Scammers Steal Over $1 Trillion in 12 Months in New Global State of Scams Report

³Over £23m lost to investment fraud in 2024 – Thames Valley PCC