Too good to be true

Too good?Too good?

Steve Wilks, chairman of the Wanstead Safer Neighbourhood Panel, examines the increasing problem of investment fraud on the vulnerable and elderly and looks at ways to minimise it.

Investing safely and profitably is one of the most important things you can do to make life more comfortable. However, what you may not be aware of are the criminals dedicated to pursuing and persuading people like you to invest in schemes that, on the surface, appear to be great opportunities but in reality are nothing but fraudulent scams that will result in a loss.

It is important to be able to recognise the signs of a scam. Usually, you are contacted out of the blue with the investment offer, shown glossy brochures, professional-looking websites and certificates that make them look authentic, and then you are pressured into making rushed decisions with no time to consider the nature of the investment. Any decision involving considerable sums of money should have a cooling down period prior to full acceptance. These scams often involve being called by a professional-sounding broker, who offers you investment opportunities with incredible potential for making a profit. They usually offer to sell you shares or bonds, but may also offer other investments, such as precious metals, diamonds, wine, art or energy. Scammers will often hire prestigious city offices, known as boiler rooms, to make their enterprise look legitimate.

In reality, the fraudsters are cold calling as many people as possible to pay for bogus investments. Once the fraudsters have made you invest as much money as possible, they quickly disappear. The resources they offer do not exist or they have not told you that your investment is worthless. For example, they will sell land that has no potential for development or rare stones that are not worth as much as they sound. You may be told to keep your investment secret to ensure you receive maximum returns, but really the boiler rooms want to prevent you from telling others to avoid being spotted.

There is also increasing evidence that victims are being hit a second time by fraudulent 'recovery rooms'. Criminals will normally contact victims with an offer to help by selling on or recovering in some other way their previous investment. This is offered through a perceived small fee payable up front when it has been alleged that the investment has been recovered. This fee can range from a few hundred to thousands of pounds. This is simply another way to extract more money from a victim. The services are never provided, the initial investment is never recovered.

An investment scheme promising an excessive return would, if legitimate, have to run some considerable risks. If the investment proposal is marketed as a high return, no or low risk, then a red flag should be flashing. Remember, if something sounds too good to be true, then it most likely is.

To report any fraudulent activity, contact Action Fraud on 0300 123 2040 or visit

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