Investment scams Investment scams explained
What are investment scams?
Investment scams offer an opportunity to invest a lump sum in return for high profits
High-risk investment scams promise high profits or interest in return for an initial financial outlay.
Victims are offered the chance to buy high-value or rare goods, stocks and shares or property that they're told will rise in value or provide regular high returns.
Investment scams can come in many forms – word of mouth, letter, email or telephone call – but will almost always be unsolicited.
Scammers make the investment seem very attractive compared with other forms of investment – low risk with exceptionally good returns. In reality, victims lose their money and are left with low value, non-existent or worthless goods, stocks and shares or property.
How high-risk investment scams work
You'll be approached by telephone, letter or email offering an opportunity to invest a lump sum in a scheme in return for high profits or interest. The investment scam might even be advertised in a local newspaper, leaflet or shop window.
Investment scam uncovered
In March 2008, we reported on an investment scam stopped by the Financial Service Authority (FSA). Fraudsters based overseas had illegally sold shares in two gold-mining companies – the Rocky Mountain Gold Mining Corporation and the Rocky Mountain Gold Mining Inc – to around 150 UK consumers using high-pressure sales tactics.
The FSA worked with Canadian authorities to freeze funds before the investment scammers could make off with the money, and recovered over £1m, thought to be 90% of the money paid out by unwitting victims.