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Investment fraud

How to recognise and avoid investment fraud scams

The term investment fraud (also known as boiler room fraud or share sale fraud), refers to a scam where fraudsters posing as sales people contact unsuspecting individuals and offer them seemingly exciting investment opportunities, such as share deals or plots of land with guarantees of significant returns.

Unfortunately millions of people fall victim to investment scams every year – from experienced investors to people dealing with a large sum for the first time.

The investments turn out to be worthless and impossible to sell on or develop- or more likely, totally fictitious and non existent. These fraudsters or bogus companies are unauthorised and unregulated.

In the vast majority of cases, innocent investors lose all of their money after being lured in by the promise of a great deal or pressured into buying by the pushy 'salesperson'. As the firms are not authorised, investors are not protected at all by any compensation schemes i.e. The Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.

Carbon credit scams

Reports of fraudulent carbon credit investments are on the increase. A carbon credit is a certificate or permit which represents the right to emit one tonne of carbon dioxide (CO2) and they can be traded for money.  

Carbon credits can be sold and traded legitimately in the UK and there are many reputable firms operating in the sector, however there are an increasing number of firms who aren’t authorised by the Financial Service Authority to sell carbon credits and it is these ‘dubious’ companies that will attempt to scam you into purchasing a worthless investment.

Fraudulent carbon credit investments are often promoted by bogus firms as ‘the new big thing’ in commodity trading, and that the government is focusing on ‘green developments’ or advised that this is an ‘ever growing market’ which is too good an opportunity to miss.

Pension Scams

Pension scams are on the increase in the UK. ‘One-off pension investments’, ‘pension loans’ or up-front cash are being used to entice savers.

For most people the offers will be bogus. Pension scheme members who are taken in, will lose most, if not all, of their savings.  Find out more about pension scams on The Pensions Regulator website.

What are the warning signs?

Cold calls: If you are contacted unexpectedly, be on your guard. This can be a cold call, email, or follow up call after you receive a promotional brochure out of the blue.

Too good to be true: Fraudsters try to tempt victims with fantastic deals and will often provide supporting information via a brochure, website or fake certificate of authenticity. They will downplay the risks to your money or will use legal jargon to suggest that the investment is very safe.  Remember; If it sounds too good to be true, it probably is.

Persistent tone and sense of urgency: Fraudsters will often apply pressure and try to convince their victims that they need to invest quickly. They often call their victims repeatedly and stay on the phone for a long time. 

Overseas accounts: In the past, a common indicator that the sale was fraudulent was when investors were instructed by the fraudster to send money to accounts based overseas. However, there are more and more reports of British bank accounts being used, so please be on your guard.

Recovery rooms: If you have fallen victim to this type of scam once it’s likely that your details will be passed on to other fraudsters who may attempt to target you again and again offering you help were you have already lost money. But they will be asking for an advance fee, which you will never see again.

What should I do if I suspect I am being sold a fraudulent investment?

Don't be pressured into buying into an investment and never send money unless you are confident about who you are dealing with and you fully understand the risks.

  1. Do your own background research on the broker or organisation. Do they have a proven track record that can be verified by an independent party? Are they a member of a trade association? Where are they based? Don't just trust a flashy website as evidence of quality. Do as much research as possible into a share that the broker is proposing.
  2. Check whether the broker or organisation is authorised by the Financial Conduct Authority (FCA). FCA authorisation is a legal requirement in order to deal in or arrange investments. Ask for a Firm Reference Number and contact details and cross check these details with those that appear on the Financial Services Register on If you are unsure, call the Financial Conduct Authority's consumer helpline on 0800 111 6768^ for more information.
  3. The Financial Conduct Authority (FCA) also provide a warning list of known unauthorised businesses believed to be involved in fraudulent activities. You can check the FCA Warning list via

If you are contacted unexpectedly by somebody trying to sell you a ‘golden investment opportunity’, you should:

Hang up the telephone

Contact us immediately if you think you may have fallen for an investment scam recently or suspect that you are being offered a fraudulent investment.

The Co-operative Bank p.l.c. is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (No.121885). The Co-operative Bank, Platform, smile and Britannia are trading names of The Co-operative Bank p.l.c., P.O. Box 101, 1 Balloon Street, Manchester M60 4EP. Registered in England and Wales No.990937. Credit facilities are provided by The Co-operative Bank p.l.c. and are subject to status and our lending policy. The Bank reserves the right to decline any application for an account or credit facility. The Co-operative Bank p.l.c. subscribes to the Standards of Lending Practice which are monitored by the Lending Standards Board.