Investment scams occur when fraudsters steal the money that you want to invest. They may come up with different opportunities to persuade you to part with your money, and it isn’t always a personal scam – in this instance a business took the hit.

If you were playing a game like ‘Who wants to be a millionaire?’, using your own money, are you less likely to take the risk than if it were a business account? For smaller businesses, this may amount to the same risk but for larger ones it could resonate.

Our fraud specialist says that, as with romance scams  and other cases where relationships are strengthened gradually, an element of behavioural science creeps in.

There are common biases that impair our judgment once a fraudster has befriended us or put themselves in a position of authority, meaning we are far more likely to buy into their suggestions. “The relationship could be built on common interests or similarity or there could simply be a strong connection similar to the foundation of friendship,” he points out.

In this case study, the victim was introduced to three separate investment scenarios by the same ‘friend’. This friend had been building up the relationship for at least six months.

Payments were made over a number of months so as to appear less urgent or suspicious but the fraudulent accounts in the case study were Confirmation of Payee (COP) matches, showing that this check alone can’t be relied on.

If COP does issue an alert when something isn’t an exact match, then account holders will usually be questioned. But fraudsters will coach people on what to say; they provide a perfectly legitimate reason why the bank transfer name is different from the one on the website visited.

“Even when we intervene, the customer might not be willing to listen; they’ve already been coached and they trust the fraudster,” says our specialist.

The third scam taps into cryptocurrency investment scams , which is an area that has become more popular with cyber criminals. The crypto element is a complete lack of regulation. “Once money goes into that environment it’s very hard to identify it in the same way you would with the standard monetary system,” he says. It’s designed to be difficult to track individual transactions and it’s something the bank has seen more of in the last few years.

Criminals will always be watching to see the industry’s next move, which is why they’re so adept at responding and manipulating. As well as the usual approaches through email, phone calls or social media, they might host fake comparison sites, where it looks as though you found the investment yourself.
 

Don’t fall victim to an investment scam:

• Always check that a business or an individual working for that business is listed on the Financial Services Register and use these details to contact the business.
• If you’re considering an investment opportunity, use the FCA to find a regulated independent financial adviser.

Visit our Fraud Hub  for upcoming webinars and practical tips for protecting yourself and your business from falling victim to fraud.