Investors are ‘turning detective’ to combat fraud in the cost-of-living crisis, research from the financial watchdog revealed.

Two in five said the investigative and research skills helped them spot clues, while 32% relied on gut instinct to determine whether an investment opportunity was genuine or a potential scam.

In 2022, £2m was saved from lining the pockets of fraudsters, with the Financial Conduct Authority (FCA) reporting a 193% increase in calls in the last five years by people reporting a firm or individual before losing money.

The most common tell-tale signs listed by the 1,036 investors polled were mistakes (34%) and an equal number cited requests for access to their personal details.

Other warning signs which aroused investor suspicion were being contacted out of the blue and being pressured to invest before an ‘offer’ ends.

The majority of scams came via email (33%), while a quarter said they were called.

Once an investor was aware of the potential fraud, 42% warned family and friends, while 27% posted on social media to make others aware.

The data comes as the FCA launches its latest ScamSmart campaign with tips and warning signs to help avoid falling victim to fraud.

‘Tempt investors into false opportunities’

Mark Steward, executive director of enforcement and market oversight, said: “Scammers are becoming more and more sophisticated, coming up with different tactics, such as impersonation texts or calls, and using the cost-of-living pressure as a way to tempt investors into false opportunities.

“Once money has been lost in this way, it’s difficult to get back, so if something seems too good to be true, it probably is. It’s great to see so many investors being able to spot the signs of a scam, and helping others to do the same. You don’t need to be a Sherlock Holmes to spot scams.

“Our ScamSmart advice and tips together with the FCA’s Warning List provides all the clues you need to sort the genuine investments from the fraudulent ones.”

The warning signs to watch for

Here are five of the main warning signs:

• Phone – Unexpected contact: scammers can cold-call or text, but contact might also come from online sources, or in person such as at an exhibition or seminar.
• Piggy bank – Unrealistic returns: scammers often promise tempting returns that sound too good to be true.
• Clock – Time pressure: scammers might offer you a bonus or discount if you invest before a set date.
• Book – False authority: Scammers might use convincing literature and websites, or claim to be regulated (or authorised) by the FCA when they’re not.
• Leaflets – Social proof: scammers might share fake reviews and claim other clients have invested.

The FCA also lists these other warn signs for investors:

• Unexpected contact – traditionally scammers cold-call but contact can also come from online sources, e.g., email or social media, post, word of mouth or even in person at a seminar or exhibition.
• Time pressure – they might offer a bonus or discount to invest before a set date or say the opportunity is only available for a short period.
• Exclusivity or secrecy – they might claim that you have been specially chosen for an investment opportunity so to keep it to yourself.
• Social proof – they may share fake reviews and claim other clients have invested or want to take up the deal.
• Unrealistic returns – fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere. However, scammers may also offer smaller, more realistic returns to seem legitimate.
• False authority – using convincing literature and websites, claiming to be regulated, speaking with authority on investment products.
• Flattery – building a friendship to lull people into a false sense of security.
• Remote access – scammers may pretend to help and ask people to download software or an app so they can access to your device. This could enable them to access your bank account or make payments using your card.