How can you be sure that what you’re investing in is genuine?

In 2018, American billionaire brothers Lorenzo Fertitta and Frank Fertitta III purchased a four-metre tiger shark preserved in formaldehyde created by the celebrated artist, Damien Hirst, for the substantial sum of $8 million.

Since then, this captivating piece of artwork has been the centrepiece of the luxurious Palms Casino Resort in Las Vegas, proudly displayed under the title ‘The Unknown (Explored, Explained, Exploded), 1999’.

Recently, however, an investigation by the Guardian revealed that the sculpture supposedly made in 1999 was actually created in 2017.

This incident serves as a stark reminder that appearances can be highly deceiving. Fraud is increasingly prevalent – not just in contemporary art, but also when it comes to investing.

Scammers are becoming increasingly sophisticated, employing cunning tactics to trick you into parting with your hard-earned wealth.

Investment scams can be particularly devastating as you could lose a significant portion of your wealth.

The Actuarial Post reveals that almost 100,000 people were victims of investment fraud in the UK between 2020 and 2023, with the average victim losing £26,773.

The good news is that there are several red flags you can keep an eye out for to safeguard your wealth from malicious behaviour.

Continue reading to discover some of these warning signs to identify whether an offer is genuine or not, and some wise steps to take before you commit to investing in an exclusive “opportunity”.

There are some red flags that could indicate an investment scam

While no two investment scammers operate identically, there are several telltale signs that could alert you to potential fraud.

You receive a cold-call about investments from someone you don’t know

Legitimate investment firms will rarely resort to calling you out of the blue to offer you opportunities. In the UK, the government has committed to banning cold-calling for marketing financial products and services.

So, if you do receive an unsolicited call about an “exclusive” investment, there’s a strong chance it could be from a scammer.

If you do receive such a call or email, it’s essential not to divulge any personal or financial information about yourself until you’re certain you’re dealing with a reputable company.

You’re told there is a time limit to make the most of a particular offer

Scammers will also try to create a sense of urgency when they present you with an offer, pressuring you into making a hasty decision to benefit from the “opportunity”.

They may claim that others are already taking advantage of a scheme and that you’ll miss out on lucrative returns if you hesitate. If you do waver, they may also offer special bonuses or one-off discounts to make the opportunity seem more alluring.

The scammer may not even allow you to call back at a later date to discuss the offer further – they’ll instead demand an immediate answer.

While it may be tempting to act on your emotions, especially if you’re enticed by the promise of competitive returns, it’s essential not to rush any significant financial decisions.

Take all the time you need to feel confident with your decisions, as any genuine investment opportunity is unlikely to pass in such a brief period.

You’re promised higher-than-average returns within a smaller time frame than usual

Many of the investment opportunities typically promise higher returns than other legitimate companies can offer.

They may promise low-risk investments with exceptionally high returns over a shorter period than you’d usually expect. It’s vital to remember the old adage that “if it sounds too good to be true, it probably is”.

Scammers may also attempt to entice you with “guaranteed” returns, though high or guaranteed returns with minimal risk are rare.

The details of the investment seem unusual

When a scammer presents an “unmissable” investment opportunity, the details may seem unusual and start ringing alarm bells in your mind.

This could include vague descriptions of the opportunity and an abundance of complex jargon. Criminals usually use this sort of language to confuse you, often focusing on the promises of high returns rather than the opportunity’s fundamental features.

Even if you request to see the company’s website to verify the offer’s legitimacy, it may lack details about the “once in a lifetime” opportunity.

There are several steps you should take before you commit to an investment

If you suspect someone is targeting you with a scam, there are some steps you can take before committing to an investment to protect yourself and your wealth.

Check the Financial Conduct Authority register

To ensure the legitimacy of an investment offer, it’s wise to begin by searching for the company or individual’s name on the Financial Services Register, which is provided by the Financial Conduct Authority (FCA).

This is a database that lists all FCA-authorised companies, and if you can’t find the firm offering you the opportunity here, it may be prudent to avoid it altogether.

Verify the validity of the firm online

In addition to checking the FCA register, you may also want to verify the firm’s website under its operating name.

This can help you avoid “clone sites”, which are illegal companies that use URLs with similar names to those of authorised firms.

You may spot unexpected hyphens or grammatical errors in the URL, which are often signs of a fake website.

Check the FCA warning list

The FCA also provides a dedicated warning list that highlights any firms or individuals that you should be wary of.

On top of this, the website contains useful information regarding investment scams you can use to further educate yourself.

Speak to a professional

Even if you’re highly financially aware and diligent, there’s always a chance that you could fall victim to an investment scam, especially considering how clever they can be.

With this in mind, it may be wise to speak to a financial planner before making any significant decisions about potentially risky investments.

They could give you peace of mind that you aren’t going to fall foul of malicious behaviour. Our in-depth knowledge can even help you pick investments that are right for your circumstances, tolerance for risk, and investment time frame.

To find out more about how we could protect you and your wealth from scams, email theteam@fortitudefp.co.uk or call us on 01327 354321.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.