Millennials increasingly targeted by scammers

Scammers are constantly thinking of clever ways to squeeze money out of people. One of their nasty tricks is to target vulnerable groups such as the elderly. Even young pensioners are a target these days now that the pension freedoms offer access to retirement savings from the age of 55. But there’s a new group increasingly at risk — social media-loving millennials. The Financial Conduct Authority (FCA) reports that those under the age of 25 are six times more likely to trust an online investment offer made via social media than people aged above 55. The FCA also reported that online overtakes phone as the most common contact method for investment fraudsters.

Fraudsters offering investments in binary options, contracts for difference (CFDs), forex and cryptocurrencies such as Bitcoin often promote themselves online and on social media channels, including Facebook, Instagram and Twitter. They typically entice victims with promises of high returns and use glamorous images of expensive watches and cars.

After someone has invested, they distort prices on their website, tie people in with extreme pay-out clauses and even close customer accounts, refusing to pay back their money. Last year investors lost an average £87,410 per day to binary options scams, according to the FCA. Binary options investments allow consumers to make bets on the expected value or price of a stock, commodity, currency or index.

Part of the problem is that people are too trusting. Almost a quarter (23%) say that online customer testimonies and reviews increase their trust in an investment company. Yet scammers are known to use fake customer reviews to lure prospective customers.

On 3 January 2018, binary options became a regulated investment product, meaning that all firms trading in binary options will need to be authorised by the FCA. Worryingly one in 10 (11%) say they wouldn’t bother checking whether a firm was regulated by the FCA or registered with Companies House, before parting with their money.

Remember that common sense always prevails, so if it sounds too good to be true, then it probably is. If you are offered an attractive investment out of the blue, be suspicious and don’t rush into parting with your money.  Check the FCA’s Warning List and even better, seek impartial advice before making an investment decision. Beware of promises of improbably high guaranteed returns.

If you only deal with regulated firms advising on and selling regulated investments, there are complaints procedures and compensation schemes in place to protect you via the Financial Ombudsman Service and the Financial Services Compensation Scheme, should things go wrong.

Article is accurate at date of writing.