The internet has opened up new vistas for scammers. Even as access to information has been democratised following easy-to-operate technology, the explosion of interest in widening investments has seen matching interest in the scamming of susceptible investors. Scammers have mastered the nuances of website designing and digital marketing. Therefore, it should not come as too much of a surprise if clone firms of infamous names start to appear on social media platforms as fully legit entities.
Investment scams are thus going to proliferate like viruses. We must mask up against them and observe the right hygiene by being selective to the media we process. We should be able to spot ‘‘scammy’’ material and give it no more than the barest iota of our precious time.
The FCA Financial Services Register: caveat emptor
The FCA Financial Services Register is the first bulwark against investment scams. It is the magnifying glass thru which new characteristics of new entities become crystal clear to our naked eyes. Clone firms masquerading as the real McCoy are much more easily identifiable when viewed thru the FCA Financial Services Register’sRegister’s lenses. So it really pays to familiarise ourselves with the Register.
In the UK, close to all financial services activities must be authorised by the FCA. This is because, accessing the right information about the competencies offered by authorised firms is thus at the investor’s fingertips.
The FCA Financial Services Register: uses
The Register exists to help you confirm immediately if the entity you are trucking with is the real McCoy. There are all the authorised firms with descriptions of activities that they have officially permitted on the list. Aside from this vital info, you can advise how best you may be protected against the unlikely event of any misdemeanour on the firm’s part. Such information and advice are informative, allowing you to see institutional safeguards against wilful wrongdoing. Companies’ presence in the list itself fairly assures the investing citizenry of bona fide good intentions.
The above information demarcates the clear from the murky. When we enter the scammers’ lair, we will be carrying the antidote to their poison.
Just make sure that the firm in question has obtained permission regarding the activity type being offered as a service to you.
The contact details listed on the Register are as the address on your passport. That’s the verified address that establishes identity. You should smell a rat when a firm invites you to an address oyster than that given in the Register. Definitely fishy, that!
The Emperor’s New clothes: clone firms and individuals
Clone firms are scammers masquerading as legit FCA authorised entities. Once they identify you as one searching for brokers online, they bombard you with not too subtle emails and text messages. They may call you. They may even give you a house call, getting your attention simply because it escapes you that verifying company employees is doable. But when a famous firm is cloned, it’s like those Korean high-fashion look-alikes. The takes here are incomparably high, however.
The ‘‘firm registration number’’ or FRN ought to be checked against the FCA Register discussed above.
Clone firms investment scams – ‘‘slippery as an eel’’
Believing you to be completely ‘‘wet-behind-the-ears’’, clone firms will approach you with a close to an authentic copy of the original website. Once they feel they have lulled you into sufficient complacency, they will give you contact details that are, for obvious reasons, nothing like the real deal (on the FCA Register). Some Register-listed firms are located overseas; however, their full contact details on the Register are non-existent. This strengthens our imposters here, who make out that they are related to those overseas firms. There being no infirmed address, the clone firms get a lease of believability.
One easy lie that’s easily caught is when a clone firm claims that the FCA Register has an out of date address or contact detail. Such details are updated every evening, so there you have the trouble-maker!
A good reason never to click links given in investment scam emails would be that one of these could lead you to fake FCA websites, even ersatz FCA Register websites! There being fake details of fake employees on the fake website, you must know the ‘‘feel of the real deal. The extent to which these scammers go is actually ludicrous!
Investment scams : a prolific family
Investment scams can be part of an extended family. At least, there are so many investment scams of like nature that you’d be surprised. The scammers’ hubris makes them feel great contempt for the intelligence of the common investor. The extended family of investment scams may include
- Cryptocurrency investment scams,
- Forex trading scams,
- Get-rich-quick, Ponzi, and Pyramid schemes,
- Land banking investment schemes,
- Rare earth metal investment scams,
- Restricted US share scams,
- Unregulated investment scams,
- Share, bond, and boiler room scams.
Crypto Asset scammers like to operate via social media. These posts, carrying likenesses of celebrities, carry links that lead up to authentic-looking websites. Visiting investors then are coaxed into sinking their funds into dubious crypto assets. Though declaring themselves to be UK entities, these firms have indistinct overseas provenance. These investment scams are also known to block withdrawals, even asking for further remittances before withdrawals are effectuated.
The FCA only regulates derivatives like CFDs and futures contracts and ‘‘deemed securities’’. They do not, however, regulate actual cryptocurrencies. As such, you will have no access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if you opt for trucking with cryptocurrency investment scam operators.
A common thread running through all the investment scams detailed above: you may even be treated to decent returns on your new investments in the fakE firm. However, soon enough, there will come a stage where there will be no more ROIs. The customer support staff will become unresponsive. Finally, utter silence.
Share, bond, and boiler room scams
Cold calling investors from boiler rooms, scammers offer targeted investors worthless, overpriced, even imaginary bonds and shares. These scammers promise to be greatly skilled in buying and selling bonds and shares, bringing in high profitability. The sales pitch is really high pitched, with the scammers even using seminars and print media. Presenting themselves as genuine opportunities providers, they will convince investors of their wealth of expertise.
Glib snake oil salesmen don’t have anything on these scammers with the gift of the gab. They could sell you what does not exist; they could offer to get you the highest possible price for shares you do own. Finally, they will accept advance payments from you- as security, promising to give you the fullest payment on condition of the sale going ahead.
The trade association for firms providing investment management, investment services and advice from individuals to companies, the Personal Investment Management & Financial Advice Associations or PIMFA has full and associate members. While the latter serves the PIMFA community, members of the general public can access a wide range of consultations available thru full PIMFA members.
The members are pledged to the goal of optimised investment actualisation. They also stand for transparency in investment processes.
Final Frontier: the PIMFA challenge to investment scammers
The Six Pillars of Wisdom
With apologies to T E Lawrence, below are the manifesto pillars:
- Enabling sector accessibility – sector promotion as a force for good;
- Futuristic sector design – future regulation;
- Ensuring proportionate regulation – including Professional Indemnity Insurance;
- Driving burgeoning markets – enabling retail investment;
- Prioritising business protection – cyber and operational resilience;
- Enabling digital business transformation – sharing good digital practices.
PIMFA is bolstered by relationships from the most powerful State actors both in the UK and the EU. In their current avatar since 2017, the organisation will serve as a lighthouse to those seeking to steer clear of the rocks of investment scams jutting around the British coastline.
There’sThere’s no fear of dashing yourself to smithereens on scammers’ rocks. All manners of agencies and authorities have your back. Notwithstanding the high level of ingenuity shown by investment scammers, they can still be spotted and clearly sidestepped. All you have to do is be in keeping of the right habits of investing hygiene.