Cost of living crisis fuels investment scam concerns
The cost of living crisis is putting more people at risk of bogus ‘get-rich-quick’ schemes and crypto scams, warns Nationwide, after its own data reveals that 36% of all scam cases are related to investments.
With households feeling the strain of rising bills, fraudsters are ramping up their efforts to trap those who are desperate to boost their income.
The building society's data highlights an increased risk for younger people, mirroring similar findings at Lloyds Banking Group earlier this year.
Here, Which? explains what Nationwide's data has revealed and offers tips on how to protect yourself.
Surge in investment scams among the young
The average victim who reported investment fraud to Nationwide in 2022 lost £5,000.
Over 65s accounted for 25% of reported cases in 2022, down from 35% in 2021, while 25 to 34-year-olds recorded 16% of cases, up from 12% in 2021.
Nationwide singled out the South East as an investment-scam hotspot, with Kent (6%), London (6%) and Essex (5%) recording the most victims.
It also raised concerns that more people are at risk of investment fraud as the cost of living takes its toll, after a survey found:
- 24% would be willing to take more risks to make money
- 61% would agree to an investment promising to double their money in a year
- 8% would agree to invest immediately to avoid missing out, without doing any of their own research
Poll conducted by Censuswide with 3,001 UK respondents, nationally representative across age, gender and region in April 2023.
Scammers hide behind cryptocurrency
One in five fraud victims send money to criminals via cryptocurrency, a Which? survey of more than 1,000 fraud victims found in 2022.
Banks are so alarmed by the spike in cryptocurrency scams that they’ve started blocking payments to protect customers.
In July 2021, Which? reported that many high street banks were restricting or blocking payments to trading platform Binance.
More recently, NatWest started imposing a daily limit of £1,000 to any cryptocurrency exchange, while Nationwide has applied a daily limit of £5,000 for debit card payments and another £5,000 limit for bank transfers since February 2023. Both providers block all credit card purchases of cryptocurrency.
How to spot an investment scam
Nationwide shares these warning signs to help you spot an investment scam:
- Unexpected contact: In the past, scammers cold-called. Now, they might contact you online, such as by email or social media. They may also contact you by post, or even in person at a seminar or exhibition.
- Time pressure: Scammers might offer a bonus or discount if you invest before a set date. Or they might tell you the offer is only available for a short period.
- Social proof: The fraudster may share fake reviews. They might claim other clients have invested or want access to the deal.
- Unrealistic returns: Fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than are available elsewhere.
- False authority: They might use convincing documents and websites, claim to be regulated and speak with authority on investment products.
- Flattery: They may try to build a friendship with you to lull you into a false sense of security.
Find out more: Five scam trends for 2025
How to invest safely
Which? would always caution against any investment 'opportunity' that you've come across online or through unsolicited contact over the phone, by email or by text.
Fraudsters often promote themselves online using social media platforms or take out adverts that appear on search engines such as Google and Bing. They may also obtain your contact details using unscrupulous methods and pose as legitimate investment firms to trick you into sending them money.
If you have any doubts, talk to someone first – for example, Nationwide offers a Scam Checker Service at local branches or via a 24/7 freephone number (0800 030 4057). You can tell them about any payment you plan to make, so they can check the details and tell you if they think it’s a scam.
The FCA also has a ScamSmart Investment Checker to help you avoid scams, and you can follow these three steps to make sure you're dealing with a legitimate financial firm:
- Check that the firm is authorised by the Financial Conduct Authority (FCA): This can be done by using the register on the FCA website.
- Check that it isn’t a ‘cloned company’: Fraudsters can masquerade as a genuine firm, so check for any other websites under the same name.
- Make sure you use contact details taken from the FCA’s register: Do not use the details given to you directly from the company, or by the person who contacted you.
Find out more: how to get your money back if you've been scammed
