Revealed: the psychological tactics investment fraudsters use

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Written by:
01/03/2017
Scammers are using ‘advanced psychological tactics’ to trick people into investing in fraudulent schemes.

The City regulator said a common method used by con-artists is to pressurise potential investors to make a quick decision on a time-limited investment offer.

They also use flattery to make victims feel good, such as praising them for being a knowledgeable investor, the Financial Conduct Authority (FCA) said.

Scammers are targeting the growing over 55 population because they are more likely to have money to invest, the regulator warned.

Other common tactics include offering lucrative returns above the market rate and downplaying risks of the investment.

They also claim deals are only available to the target and ask them to keep them secret.

Research suggests only two in five people think they know how to spot a fraudulent investment opportunity.

If someone invests their money with an unauthorised firm, they will have no protection from the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.

Mark Steward, director of enforcement at the FCA, said: “Be alert to warning signs like being contacted out of the blue, promises of low risk and/or guaranteed above market returns, special deals just for you, time pressure and, very often, flattery.

“Be vigilant. Don’t let them push you into making a decision and parting with your money. Question their claims. Check the FCA Register and seek impartial advice. If in any doubt – don’t invest.”

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