Fraudsters target young victims with investment scams: Under 25s now make up a quarter of all cases and are being urged to dodge fake adverts
- Investment scam victims lose around £8,585 on average
- Younger investors lured by fake crypto and meme stocks
- Based on analysis of all investment scams reported by Lloyds Banking Group
Under 45s now account for seven in ten of reported investment scams, according to new data from Lloyds Bank.
Those aged under 25 are most likely to fall victim to an investment scam, making up around a quarter of all cases.
Many younger duped investors said they were lured by fake adverts on social media promoting cryptocurrencies and meme stocks.
Lloyds Bank is warning would-be investors that scammers will exploit any new opportunities to trick victims into parting with their cash.
A meme stock refers to shares in a company that have gone viral, quickly increasing in value as a result of its popularity amongst retail investors. The activity is usually coordinated through online chat forums and social media.
Liz Ziegler, retail fraud & financial crime director at Lloyds Bank, said: ‘The organised criminal gangs behind scams are constantly evolving their tactics to exploit new trends and trick more victims into parting with their cash.
‘Recently we’ve seen them widen their net to target younger investors, who are often tempted by the supposed ‘get rich quick’ promise of cryptocurrencies and meme stocks.’
However, while young people are the most likely to fall prey to these fraudsters, 35 to 44 year olds have reported the biggest increase in scams over the last 12 months, up by 52 per cent compared to the previous year.
The average amount lost per victim was £8,585, although this varies widely amongst different age groups, with older victims usually losing much more.
Victims between 65 and 74 lost an average £30,397 more than any other age group.
The amount lost by younger age groups is typically a lot less, with 18 to 24 year olds losing £1,433 on average, and those aged 25 to 34 losing £2,410.
‘While older investors remain at high risk – and often stand to suffer much heavier losses – there’s now a new generation of younger, more inexperienced investors on the scene for scammers to target,’ said Ziegler.
‘Predictably, our analysis suggests that social media platforms are the main breeding ground for these types of scams, with a mix of bogus ads, fake endorsements and cloned accounts key to fraudsters’ methods.’
The research also found that victims typically make three payments to fraudsters over the course of an investment scam.
With financial markets increasingly volatile, Lloyds Bank is warning would-be investors that scammers will exploit any new opportunities to trick victims into parting with their cash.
Often, a deal will offer returns that you can’t get elsewhere. If someone contacts you out of the blue about an investment, it’s most likely a scam.
How to avoid investment scams
If someone calls or emails you out of the blue sounding like they’re Jordan Belfort from The Wolf of Wall Street offering you investment returns that you can’t get elsewhere, it’s most likely a scam.
Remember great investment opportunities don’t tend to seek you out and that fraudsters typically advertise their scam investments on social media and the internet.
Ziegler adds: ‘Investing can be a great way to make money, but many deals are simply too good to be true, and it takes hard work and lots of research to find the right investment for your circumstances.’
You also need to remember that fraudsters can easily fake companies, profiles and websites to clone real firms – so make sure it’s genuine.
Use the FCA website to find genuine contact details for a company and links to their site.
Always do your own research but also see what other people have to say in reviews and never underestimate the lengths a scammer will go to, to convince you an investment is genuine.
Finally, a scam investment may ask you to pay by bank transfer. If you pay this way and it’s a scam, it’s very hard to get your money back.
Fraudsters might ask you to pay an account in a different name to the company you are meant to invest with.
If the names don’t match, it’s a sign of a scam. Paying by card offers the greatest protection.