Consumers warned about rise in investment scams

As part of its latest quarterly data publication, the Financial Ombudsman has found that investment scams have seen the biggest increase as a proportion of “authorised” scam complaints, despite the number of “authorised” scam complaints decreasing overall.

The Financial Ombudsman received around 1,900 complaints about “authorised” scams against the consumer’s bank, compared to around 2,380 in the first quarter of 2021/22 (1 April – 30 June 2022). The Financial Ombudsman upheld around 60% of investment fraud complaints in the consumers’ favour. 

Below is a breakdown of its “authorised” complaints caseload for the first quarter in 2022/23 as well as the same period in 2021/22. 

Analysis of around a fifth of the investment fraud complaints received in the first quarter of this financial year shows that over half of the investment fraud complaints involved cryptocurrencies. A typical cryptocurrency scam involves a consumer being persuaded to purchase a cryptocurrency through a legitimate intermediary and sending money to what they believe is a genuine investment platform, but which is in reality operated by fraudsters. In cases of investment fraud, the Financial Ombudsman has seen examples of consumers being scammed out of tens or even hundreds of thousands of pounds.

Nausicaa Delfas, interim Chief Executive and Chief Ombudsman, Financial Ombudsman Service said: 

Complaints about investment scams are currently the fastest growing type of fraud complaint that the Financial Ombudsman Service receives.

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.

Notes to editors

About the data

The Financial Ombudsman Service manually tracks investment fraud data. All the data in the press release, including “authorised” scams data is in relation to “sending” bank complaints only – the consumer’s bank that initially transfers the funds.

What is a “safe account” scam?

A “safe account” scam is where a consumer is cold-called by a fraudster and told they have to move their money to a safe account as their account is at risk.

What is an “authorised” scam?

An “authorised” scam is when a person or business is tricked into sending money to a fraudster posing as a genuine account holder.

What is an investment scam?

Typically scams where the customer is tricked into making a payment to an investment that doesn’t exist, though some investment scams may involve the actual sale of an asset but at a significantly inflated price. Common scams include the impersonation by fraudsters of genuine firms and/or products and sham trading platforms which appear to give the customer the ability to speculate on the value of assets, often cryptocurrency.

Help for consumers

The Financial Ombudsman Service has advice for consumers on how to protect themselves from fraud and scams.

About the Financial Ombudsman Service

The Financial Ombudsman Service was set up by Parliament to resolve individual complaints between financial businesses and their customers on a fair and reasonable basis, as an alternative to the courts. It can look into problems involving most types of money matters from payday loans to pensions, pet insurance to PPI. It is committed to sharing insight and experience to encourage fairness and confidence in financial services.