How to protect yourself from investment scams

5 min read 15 Dec 22

Summary: When it comes to scams, fraudsters will use whatever methods they can to gain access to your money. And as we've seen during the COVID-19 pandemic, scammers are using the current cost of living crisis to their advantage, by targeting people eager to save cash, earn extra money on their investments, or claim help that they’re entitled to.

In this article, we look at some common ways criminals will try to access your personal details and the steps you can take to protect yourself.

‘Phishing’ for information

Criminals will often use ‘phishing’ emails to trick people into revealing information about themselves and then use that ill-gotten information to steal money.

The theft of information is often done by clicking on a fraudulent link within a message to gain access to personal information, such as account details or passwords, that criminals can then use for their own financial gain. These messages look and sound like they’re legitimate, but must be approached with extreme caution.

In the case of the cost of living crisis, scam messages may also suggest that financial measures being offered by the government to help those struggling, such as energy rebates or cost of living payments, have to be ‘claimed’ by completing a bogus application form – when many of these financial payments will actually be applied automatically.

Find out more about phishing, vishing and smishing here.

Learn how to stay safe with Take Five – Stop, Challenge and Protect

Keeping you safe from fraud is something we take very seriously. That’s why we’ve signed up to Take Five, the UK anti-fraud initiative to help prevent email, phone and online fraud – particularly where criminals try to impersonate trusted organisations.

The Take Five campaign encourages everyone to Stop, Challenge and Protect. This means that when faced with an email, suspicious phone call or text, you do the following:

Stop: Take a moment to stop and think about what you’re hearing or seeing. A trusted organisation won’t pressure you to act fast or ask for sensitive personal information over the phone, by email, or text. 

Challenge: It’s all right to question what you’re seeing or hearing. Ask yourself: Could it be fake? It’s ok to reject, refuse or ignore any requests to answer questions or supply information. Only criminals will try to rush or panic you.

Protect: Contact your bank or financial service provider immediately if you think you’ve fallen for a scam and report it to Action Fraud (the National Fraud & Cyber Crime Reporting Centre) at www.actionfraud.police.uk

You can find out more, including a quiz to check whether you can spot fraud, on the Take Five website

Common cost of living scams

With the rising cost of living, Take Five is warning of four key scams to be on the lookout for:

  1. Purchase scams – We’re all trying to save money at the moment, but if a deal looks too good to be true, it probably means it is. Criminals will often offer a product or service at bargain prices and may push for a quick sale by bank transfer, rather than using a secure payment method. Do your checks and don’t be rushed into handing over any money until you know the offer is legitimate.

  2. Impersonation fraud – Criminals will try to gain access to your sensitive information by pretending they’re a trusted provider, such as your bank or a government organisation (e.g. HMRC). You should always check that the email, text or letter is from your provider before providing any information, especially if they’re offering a rebate or other monetary incentive for the information you’ll be providing. Another red flag is spelling mistakes or the use of unusual language – if you spot any of these, proceed with extreme caution.

  3. Investment scams – We all want to make the most of our savings and investments during the current financial squeeze, and criminals will be looking to take advantage of this. Investment fraud is where criminals convince people to move existing investments into a fund that may not exist, or to pay for an investment that turns out to be fake. Again, if returns sound too good to be true in the current market conditions, stop and ask yourself ‘can I trust this information?'

  4. Payment in advance fraud – This is when a criminal will ask for payment upfront for arranging a financial product or service, for example, a loan, which you don’t receive. If you’re contacted and told that once you’ve paid a fee you’ll receive money, prizes, or goods you’re not expecting, it could be payment in advance fraud. Be wary of contacts from unknown sources who promise anything of value that could be yours, once you make a payment.

Don’t act on fear

Scammers will often project an element of fear into their messages, suggesting that if you don’t act quickly you’ll be at risk of significant financial loss, or that a ‘bargain’ deal will no longer be available. But remember, if it is a genuine request, no one will mind you being cautious – only a scammer will try to put pressure on you to act before you’re ready.

Help and sources of information

If you think you’ve been a victim of fraud, please contact your provider. You can also report it to Action Fraud at www.actionfraud.police.uk

You can find more information and tips from Take Five

You can find out more about phishing emails, bogus websites and current HMRC scams at www.gov.uk/report-suspicious-emails-websites-phishing

By M&G Investments

The views expressed here should not be taken as a recommendation, advice or forecast.

The value and income from any fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that any fund will achieve its objective and you may get back less than you originally invested. 

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