Investment scams are the fastest growing “authorised” scam complaint the Financial Ombudsman Service (FOS) now receives, despite the number of “authorised” scam complaints decreasing overall.

An “authorised” scam is where a person or business is tricked into sending money to a fraudster posing as a genuine account holder.

As part of its latest quarterly complaints data (Q1 2022/23), the FOS revealed it received 1,900 complaints about “authorised” scams, down from the 2,380 received in the same period a year earlier.

This is broken down into 30% relating to investment scams, 33% involving impersonation scams, a quarter on buying goods not received and 12% including romance scams.

The FOS confirmed it upheld around 60% of investment fraud complaints in consumers’ favour.

Further, over half of the investment fraud complaints it received involved cryptocurrencies.

It said a typical cryptocurrency scam involves a consumer being persuaded to buy a cryptocurrency through a legitimate intermediary and sending money to what they believe is a genuine investment platform, but which is in reality operated by fraudsters.

Worryingly, it added that it has seen examples of people being scammed out of tens or even hundreds of thousands of pounds.

Meanwhile for this quarter, the top five most complained about products included current accounts (5,460), credit cards (3,372), car or motorcycle insurance (2,525), motor hire purchase (1,751) and buildings insurance (1,642).

Nausicaa Delfas, interim chief executive and chief ombudsman at the FOS, said: “Complaints about investment scams are currently the fastest growing type of fraud complaint that the FOS receives.

“We are concerned that, in current economic circumstances, people could be tempted to invest in fake investments. Our advice to consumers is be wary, conduct their own research, check the FCA register and contact the firm directly on the number listed.

“If people feel they have been treated unfairly by their bank, they should contact the FOS, and we will see whether we can help.”

‘Financial crime is a bit like Covid’

Separately today, Sarah Pritchard, executive director of markets at regulator, the Financial Conduct Authority (FCA), likened financial crime to Covid as she said: “Like the virus, which mutates to evade destruction, criminals seeking to cash out and carry out financial crime are ever-changing – they will adapt to exploit new weaknesses in the financial system and will constantly vary their tactics when targeting the vulnerable for fraud.”

Pritchard added: “Sadly, we expect financial crime to become even more prolific during the cost-of-living crisis.”

The FCA revealed more than seven in ten people said they have been targeted by scams in the past three months as con artists try to exploit the cost of living.

Speaking at the Financial Crime Summit, she said: “We are already seeing more scams such as loan fee fraud, ghost broking, and false access to rebates from utility companies.

“And we anticipate a potential rise in people being recruited to act as money mules too, where they are asked to transfer money through their accounts by strangers in exchange for a payment.

“The temptation for people in difficult circumstances is huge. But so are the consequences. This is money laundering – criminals trying to move cash ill-gotten from modern slavery, drugs, fraud, terrorist financing and other crimes. It can be detected, and can result in prosecution and a red flag in financial records.”

Tom Selby, head of retirement policy at AJ Bell, said: “Scammers often use sophisticated techniques to swindle people out of their savings, with cryptocurrency ‘investments’ offering huge potential returns increasingly used to tempt people to part with their cash.

“These investments often end up being a Ponzi Scheme, or entirely fictitious, with those who hand over their money risking losing everything.

“While people of all ages can fall victim to scammers, those who are able to access their retirement pot – potentially the biggest asset they own – will inevitably be a prime target. Huge efforts continue to be made to protect people from thieves, but ultimately the surest way to avoid becoming a scam victim is to know the tricks they use and not hand over your money in the first place.”

Five ways to avoid scams

Below Selby lists five tips to help people stay alert to fraud and avoid the potential of being scammed:

1. If someone contacts you out of the blue to talk about your pension, hang up

Most people at some point will have received a phone call from someone they don’t know claiming to offer an incredible investment opportunity for their savings or a ‘pension review’ service. If this happens, hang up immediately. Don’t respond to text messages, emails or social media contact from someone you don’t know claiming to hold the key to retirement nirvana. In all likelihood, this will be a scammer phishing for victims, so, whatever you do, don’t take the bait.

2. Don’t deal with unregulated ‘advisers’

While telephone, text, email and social media remain the primary weapons of choice for the modern con artist, some continue to knock on doors; usually targeting older people they think are more likely to be vulnerable. Make sure you only deal with FCA-regulated advisers – this is particularly important as if you are sold an investment by an unregulated individual, you won’t have recourse to compensation.

3. Be wary of overseas or crypto investments promising sky-high returns

Scammers often promise double-digit returns through exotic investments in far-flung locations. Promoting cryptocurrency investment ‘opportunities’ has also become an increasingly popular route for fraudsters. If you’re told you can get 10%+ annual returns from a tea plantation in South America or a hotel room in Spain, tread carefully and do your due diligence. Often fraudsters will advertise investments in an asset that doesn’t exist or hasn’t yet been built, so don’t hand over your cash unless you’re 100% confident you’re being sold a genuine, bona fide investment.

4. Watch out for schemes offering ‘guaranteed’ returns

Nothing is guaranteed when it comes to investments. If a company you’ve never heard of says it can deliver guaranteed returns of any amount, don’t touch them with a barge pole.

5. Don’t rush to make a decision

Don’t be forced into doing something you aren’t comfortable with and might regret by a pushy salesman or saleswoman desperate to boost their commission. Your pension might just be the most valuable asset you ever own, so invest it wisely. And if you are at all unsure, check the FCA’s ScamSmart website or speak to a regulated financial adviser before making any decision.