Fraudsters have been using platforms such as Facebook, Instagram and Twitter to lure people into investing in cryptocurrencies, foreign exchange and binary options for some time now.

Evidence of this is illustrated by UK Finance which says investment scams jumped 84% in the first half of 2021 and total losses almost doubled from £55.2m in the first half of 2020 to £107.7m.

These are big figures and at a personal level they can represent the loss of life savings and hard-earned money.

The scammers often trick people with convincing social media profiles or websites with bogus reviews, which disarms potential victims.

Below are some tips to help you identify online investment scams.

Is the deal too good to be true? - Scammers will often pretend to be from legitimate and trustworthy organisations, offering an enticing incentive to get people to click through to a ‘too good to be true’ deal. The first thing to do is a quick search for the promotion. If the company is promoting a deal on social media, they are likely to also be promoting it on their homepage.

Check the URL - Closely inspect any URLs you aren’t sure about. Does the URL look suspicious? Does it match the URL of the company website? Sometimes enticing posts on social media link to a fake login page, and when you enter your email and password, you’re giving this information to a scammer.

Check the branding – Check the post for branding inconsistencies. Is the correct logo being used. Is the standard of design and presentation consistent with what you expect from the company? If it’s a new brand entirely, go to its profile page and have a proper look at how it’s presented. Does it look professional or does it look like a quick and sloppy job?

Send a message - Send a private message to your friend or family member asking them if they posted the ‘investment opportunity’ status on your social media timeline. They make think it was genuine. Trust your instincts if you’re not convinced. It’s better to miss out on one deal than give away your person details for scammers to sell on the black market.

Contact the company - You could reach out to the company to find out if the deal is genuine. Don’t do this by clicking on any links in the post you suspect could be a scam. Rather search for the company’s real homepage and contact them via a social media account, email address or telephone number.

Fake social media adverts – Scammers also sometimes pretend to be advertisers. They create social media accounts and pay to have their scam message advertised to you in your social media account. The scammers are trying to exploit the credibility of social media advertising. Stay vigilant when you see new organisations pop up on your feed. You should also be suspicious if you see a new social media account advertising for a company you know well. It may be a scammer pretending to be a new account for the company.

Cryptocurrencies

With the rise of cryptocurrencies as a legitimate payment method there has been a corresponding rise in online fraud that aims to exploit the uncertainty among many people who want to invest but are still uncertain as to what cryptocurrencies actually are and how they are used.

Cryptocurrencies are virtual peer-to-peer currencies that are decentralised. This means the currency only exists online and is not controlled by a bank, treasury or country. You’ll have heard of Bitcoin, the most famous cryptocurrency, but there are more than 1,500 cryptocurrencies including other well-known ones such as Ethereum and Litecoin.
  • Many legitimate businesses, such as Expedia and Microsoft, accept cryptocurrencies as payment which has legitimised them to some extent as a mainstream form of currency.
  • Quick transaction times is one of the reasons people like cryptocurrencies. That is, payments and transfers can be made within seconds and without out any intermediaries.
  • Cryptocurrencies also allow you to pay for or sell something anonymously. This makes them particularly appealing to scammers and shady online dealers.
Investment opportunities… and scams

If you’ve followed the price of Bitcoin, or the news stories, you can’t help noting that it’s a volatile currency. Over the past year its price has hit a peak of $50,000 and also plunged to lows of just over $20,000. If you know what you’re doing it can be a tempting investment by riding on the highs and lows, but this is best left to professional investors.

However, what this has done is raise the profile of cryptocurrencies. And the unwary can easily be caught out. For instance:
  • Before a new cryptocurrency is launched on an exchange, you can buy the cryptocurrency coins or tokens as part of an Initial Coin Offering (ICO). However, the price can be inflated at the time of the ICO in what's known as a pump-and-dump, with the price subsequently crashing.
Some common online cryptocurrency scams, either via social media or website ads, to look out for include:
  • A fake cryptocurrency which doesn’t and won’t ever exist such as a fake ICO.
  • A bogus investment which promises to put money in a legitimate cryptocurrency.
  • Cryptocurrency ad links that take you to dangerous website links that then downloads malware onto your computer.
In short, if you are uncertain or don’t understand a cryptocurrency or an investment, avoid it. And certainly don’t hand over any money.