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Millions of pounds lost to crypto fraud on social media

More than £63m has been lost nationally by victims of investment fraud via a social media platform, says Action Fraud

British citizens have lost more than £63m in the past year to investment fraud conducted via social media platforms such as Facebook and Instagram, with almost half of the scams relating to cryptocurrency, according to new figures from Action Fraud.

The national reporting centre for fraud and cyber crime today revealed that it had received 5,039 reports of investment fraud that made reference to social media in a 12-month period, with many victims saying they were directly approached by a fraudster, while others said they were lured in via fake advertisements on their social media feeds.

The City of London Police, which oversees the Action Fraud service, said social media investment scams bucked the trend for typical victims of investment fraud, with men and the under-30s particularly vulnerable. Looking at investment fraud reports where social media played no role, the average age of victims is over 50.

“Reports of investment fraud have increased significantly since the start of the coronavirus pandemic, which is unsurprising when you think the vast majority of us have had to conduct nearly every aspect of our lives on a computer or mobile phone,” said Sanjay Andersen of the City of London Police’s National Fraud Intelligence Bureau (NFIB).

“Being online more means criminals have a greater opportunity to approach unsuspecting victims with their scams. We would encourage anyone thinking about making an investment to do their research first. Visit the FCA’s website and check and double-check every detail before handing over your money or personal details.”

The NFIB’s analysts found that in many cases, cyber criminals were exploiting social media influencers to carry out their scams, exploiting the brand image and reputation of well-known people without their knowledge, and advertising bogus celebrity endorsements.

In cases where fake online adverts were used, the ads were often highly credible and professional-looking. Fraudsters also sent convincing emails and built convincing websites to promote fake investment opportunities in cryptocurrency, foreign exchange trading and bonds, again often “endorsed” by a high-profile figure.

Between April 2020 and March 2021, Action Fraud received more than 500 reports of investment scams linked to bogus celebrity endorsements, and at one point in the summer of 2020, the National Cyber Security Centre (NCSC) was sufficiently concerned about this problem to issue its own guidance.

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Another common trend relates to cloned company investment fraud, where criminals copy the branding of real investment companies to con people into parting with their money. Some victims of this type of fraud reported seeing LinkedIn profiles for the brokers who first approached them, which in many cases helped to convince them the offer was above board.

Rocio Concha, director of policy and advocacy at Which?, said: “Online investment scams have a devastating financial and emotional impact on victims and our research has shown that the current reactive approach taken by social media platforms is not fit for purpose. 

“The government has now recognised that the major online platforms we interact with every day have a responsibility to protect their users from scams. It is essential that the Online Safety Bill gives them a legal responsibility to prevent, identify and remove fake and fraudulent content on their sites – including the vast number of adverts and websites used by fraudsters.”

Action Fraud has released a series of tips to help people safeguard themselves against investment fraud. These include:

  • Be suspicious of unsolicited approaches about investment opportunities, wherever they originate from.
  • Do not allow yourself to be rushed into making an investment, and research investment vehicles thoroughly before committing – no legitimate organisations should apply high-pressure tactics.
  • Seek advice from trusted friends, family members or independent financial advisers (IFAs) before making a decision.
  • Only use IFAs accredited by the Financial Conduct Authority (FCA) – those who are not may also be dodgy.
  • Check the FCA register to make sure you are dealing with legitimate firms and people. The FCA also operates a warning list of organisations to avoid.
  • Only use the contact details held on the FCA register, and be aware of any subtle differences, such as the substitution of upper case Is for lower case Ls.
  • Do not trust, or be influenced by, glowing reviews from supposedly “high net worth” individuals – they may not even exist.
  • Remember the adage that if something seems too good to be true, there’s a 99% chance that it is.

People who think they have been a victim of investment fraud are encouraged to report online or via telephone on 0300 123 2040. The FCA also provides online resources on investment fraud.

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