10 ways conmen will take your cash, if you let them

As consumer champions gear up for Scams Awareness Month, Emma Dunkley looks at how you can spot a fraudulent investment

There's a new sheriff in town – or two, to be precise. The Financial Services Authority, the regulator of firms selling investment products and services, has turned into two separate entities. And they are set to get tougher on fighting financial crime.

Of the two, it will be the Financial Conduct Authority (FCA), that will clampdown on scams in the industry and focus more on protecting consumers. It can tackle unauthorised businesses, prosecute firms, issue warnings against companies giving cause for concern and, wherever possible, give money back to you if you've been conned.

"The scams we are seeing most frequently are those that purport to sell alternative, unregulated investment products such as carbon credits, rare earth metals and overseas property, land and crops," says Tracey McDermott, a director at the FCA.

"We have also seen a notable increase in unauthorised cold-callers offering advice on transferring pensions or to arrange early access to a pension pot, often with attractive cash incentives."

And these financial scams can leave you not just slightly out of pocket, but thousands of pounds down, warns Gillian Guy, the chief executive at Citizens Advice. "In May, we're running scams awareness month with trading standards to warn people about common scams and what they can do to avoid them," she adds.

So what are some of the most prolific financial scams that could leave you a victim of crime?

Carbon credit trading

You tend to be cold called by a salesperson offering carbon credits, which provide the right to emit a ton of carbon dioxide and can be traded for money. The salesperson could try and sell you carbon credit certificates or lure you to invest in a "green" scheme that offers carbon credits in return.

The caller might try to persuade you with phrases like "this is the next big thing", as industries have to off-set their carbon emissions, and by emphasising how governments are focusing on "green" developments. The FCA warns you could lose money by not being able to sell the credits, nor get a competitive rate when trading them in small volumes.

Cloned firms

Some con-artists claim to represent firms authorised to sell investments. And some go as far as to try and change firms' contact details on the FCA register to look genuine.

These scammers then give their own phone number, address and website details to you and usually claim to be from overseas firms that appear on the FCA register, as these companies do not always have their full contact and website details listed. "We have even seen fake versions of our website and register that include the fraudsters' contact details rather than those of the genuine, authorised firm," the FCA says.

Get rich quick

These schemes, like Ponzi and pyramid scams, promise very high returns or dividends, and can deliver these in the early days. But, further down the line you are likely to lose your cash. These schemes work by using money from new investors to pay existing investors, making them look genuine early on.

The schemes implode when there are not enough new investors and money stops coming in. You could find all of your money is gone and the scammers who set them up have taken most of it. Pyramid schemes focus on the money you can earn by bringing on board new investors.

Land banking

A cold-caller will tell you that by investing in small plots of land, you can make "big profits" once planning permission has been granted. However, you could lose large amounts of cash as this permission is often not granted, or even applied for, leaving you with land worth virtually nothing.

Although not all land banking schemes are fraudulent, the FCA warns it is often not made clear that there are restrictions on the land's development or that it is protected.

Fund transfers

You might get a letter or phone call asking you to receive a payment into your bank account. You are then asked to take this amount out in cash and send it abroad using a form of money transfer service. In return, you're told you'll get commission. But you might never get this commission, or if you do get a small amount, you're probably being used as a conduit by criminals to launder money – implicating you in the crime.

Rare earth metals

You might get a call from a salesperson promoting rare earth metals, claiming there is high demand for these metals in manufacturing and they can lead to large returns. Unlike gold and silver, it's hard to find the prices of these metals, which are sold on private markets, so it is difficult to see if you're paying the right price. And you could end up selling at a loss, if you can sell them at all.

As rare earth metal extraction schemes are usually based overseas, UK authorities cannot check the products or confirm they exist.

Boiler room and shares

"You get a call saying there's a fantastic investment opportunity in relation to shares," says Louise Baxter of the Trading Standards Institute. "The callers use high pressured selling techniques, often saying it's an offer too good to miss and that a decision needs to be made immediately – or the opportunity will be lost. The returns they promise are always very high. And if you fall for it once, you're put on a 'sucker list' that gets passed around."

Overseas tree and crops

These offer investment in trees and crops, as well as other ethical programmes, but without the protection of compensation schemes.

The investment is usually stated to be low-risk but promises high, often guaranteed returns of around 15-25 per cent, the FCA said. The investment period tends to be around five years, after which your plot is supposedly harvested, sold on your behalf and the profits given to you.

Phishing

"Emails started to come from people pretending to be at banks," said Ms Baxter. "But now this has advanced and is starting to come from people pretending to work at PayPal, for example. They take small amounts of money off your credit card or from your account, so say 70p every day, in order to go under the radar. They might simply ask for you to re-enter your username and password to do this, saying they've lost it."

Website romance

"This is like grooming online," says Ms Baxter. "The scammers target people on dating sites, make them fall in love, then ask for money."

How to avoid scams

The cliché "if it sounds too good to be true it usually is" holds true.

"Be careful with your personal details," says Ms Guy. "If you've been contacted out of the blue, are urged to sign up quickly and not tell anyone else about the offer, have been given only a mobile number or a PO Box address then it could be a sign that it is a scam." And Ms McDermott warns to be sceptical of any promise of fantastic investment returns.

If you think you've been had, call the FCA's helpline on 0800 111 6768.

Emma Dunkley is a reporter for Citywire.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
people And here is why...
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
Voices
voicesBy the man who has
Sport
Arsene Wenger tried to sign Eden Hazard
footballAfter 18 years with Arsenal, here are 18 things he has still never done as the Gunners' manager
PROMOTED VIDEO
Life and Style
The new Windows 10 Start Menu
tech
Arts and Entertainment
Kristen Stewart and Robert Pattinson star in The Twilight Saga but will not be starring in the new Facebook mini-movies
tvKristen Stewart and Stephenie Meyer will choose female directrs
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
books(and not a Buzzfeed article in sight)
News
William Hague
people... when he called Hague the county's greatest
News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
Arts and Entertainment
Twerking girls: Miley Cyrus's video for 'Wrecking Ball'
arts + ents
Arts and Entertainment
Ed Sheeran performs at his Amazon Front Row event on Tuesday 30 September
musicHe spotted PM at private gig
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

    The children orphaned by Ebola...

    ... then rejected by surviving relatives over fear of infection
    Pride: Are censors pandering to homophobia?

    Are censors pandering to homophobia?

    US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
    The magic of roundabouts

    Lords of the rings

    Just who are the Roundabout Appreciation Society?
    Why do we like making lists?

    Notes to self: Why do we like making lists?

    Well it was good enough for Ancient Egyptians and Picasso...
    Hong Kong protests: A good time to open a new restaurant?

    A good time to open a new restaurant in Hong Kong?

    As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
    Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

    Paris Fashion Week

    Lagerfeld leads a feminist riot on 'Boulevard Chanel'
    Bruce Chatwin's Wales: One of the finest one-day walks in Britain

    Simon Calder discovers Bruce Chatwin's Wales

    One of the finest one-day walks you could hope for - in Britain
    10 best children's nightwear

    10 best children's nightwear

    Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
    Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

    Manchester City vs Roma

    Five things we learnt from City’s Champions League draw at the Etihad
    Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

    Trouble on the Tyne

    Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?