Investment scams accounted for a third (33 percent) of all money customers lost to scammers in 2023, up 23 percent year-on-year, according to Barclays data. Of all scam types, investment scams made up the greatest share of total claim values, with the volume of investment scams increasing by almost a third (29 percent).

This spike is being fuelled by scammers taking advantage of their ability to promote unverified financial adverts on social media sites; more than 6 in 10 (61 percent) investment scams now take place on these platforms.

Believing that they are investing in their future, investment scam victims are claiming an average of £14,313 – over five times more than the overall average scam claim. Barclays data shows millennials and men are particularly susceptible – men’s average investment scam claim increases to £16,306, while claims by young people aged 21-40 account for 48 percent of all investment scams.                                      

Whilst scammers target potential victims in several ways, adverts purporting to offer high-return investment opportunities are a common tactic – with a quarter (23 percent) of young people saying that they’ve spotted what they believe to be an investment scam advertised on social media. Almost one in five young people (17 percent) has been contacted on social media by an individual offering an investment opportunity and one in every 10 people in the UK (11 percent) know someone who has fallen victim to an investment scam.

A common trick that scammers will play is to get their victims to invest a small amount at the start – this then seemingly returns high rewards, which the scammers payout from other victims’ money. This often convinces the victim that the investment is legitimate and in turn leads to larger amounts being lost to the scammers, often over a long period.

As a testament to the importance of due diligence, analysis of data from the FCA’s consumer helpline shows that there has been a sharp spike in investment scam-related calls, up 193 percent in the last five years. The data also reveals investors have saved £2 million by identifying when purported investment opportunities were too good to be true – either by spotting spelling, grammatical or formatting mistakes, or by realizing that requests for personal information were suspicious.

Stephanie Mac Sweeney, Head of Fraud Strategy at Barclays said: “It’s worrying to see such a rise in investment scams – with victims often heartlessly scammed out of large sums of money that they have been saving for their future. The banking industry works hard to educate, identify, and intercept scams, but the only way to drive real change is to target these scams at their source. With the majority of investment scams now taking place on their platforms, social media firms must take responsibility, act on their promises, and deliver a robust verification system to protect innocent people from falling prey to fraudulent investment adverts.”

Stephanie Mac Sweeney offers her top tips to help identify an investment scam:

1. Stop: Social media thrives on human impulse and scammers often create a false sense of urgency. It’s important to pause and reflect before committing to any investments.
2. Think: If an offer seems too good to be true, it probably is – particularly in the case of investments advertised on social media. Speak to a qualified financial advisor or family member to get a second opinion. Be wary of taking investment recommendations from a friend without doing your research – whilst they may mean well, it’s important to make sure both you and your friend aren’t at risk of falling victim to a scam.
3. Investigate: To test if an investment opportunity is genuine, check to see if the person or organization contacting you is FCA-authorized via the Financial Services Register or the FCA’s ScamSmart Investment Checker. Do your research and look for unbiased reviews of the potential opportunity you’re considering.