Watch out! Investment scams targeting young people surge ahead of the ISA deadline

New research shows young people are at the highest risk of falling victim to investment scams. Here’s how to protect yourself during ISA season.

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Younger people are at a higher risk of falling victim to investment scams, according to new research from Lloyds Bank. The research reveals that people aged under 45 now account for 70% of all reported investment scams.

Ahead of the tax year’s end and the ISA deadline, how can Brits who are keen to make of their £20,000 ISA allowance protect themselves? Read on to find out.

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What’s the latest news on investment scams in the UK?

According to Lloyds Bank, 18-24-year-olds are the most likely to be victims of an investment scam, accounting for a quarter (25%) of all investment scam cases.

Younger investors who have been duped say they were lured by fake social media ads promoting cryptocurrencies and ‘meme stocks’.

Despite the fact that 18-24-year-olds are the most likely to fall victim to an investment scam, the largest increases in scam cases in the last 12 months have been recorded among those aged 35-44. According to Lloyds Bank, cases among this age group have increased by more than half (52%).

Meanwhile, cases among people aged 25-34 have increased by nearly a quarter (24%).

How much does the average investment scam victim lose?

The average amount lost per victim is £8,585, which is lower than the amount recorded the previous year (£10,217).

However, the amount lost varies between victims of different ages, with older victims losing the most. Victims between the ages of 65 and 74 lost a staggering £30,397 on average, the most of any age group.

Young people lose much less, with the average loss for 18-24-year-old being £1,433 and for those aged 25-34 being £2,410.

Research also shows that victims typically make an average of three payments to fraudsters over the course of an investment scam.


How can you protect yourself?

ISA season provides a prime opportunity for fraudsters to try and scam investors. For example, many investors will be rushing to use their £20,000 annual ISA allowance before the ISA deadline on 5 April.

Stock markets are also going through a volatile period, and innocent investors looking to make more money from their investments are likely to be more accommodating of scammers who assure them of positive returns.

Liz Ziegler, retail fraud and financial crime director at Lloyds Bank, warns investors to be cautious during these times. She says: “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.”

So, how can investors avoid becoming victims of investment scams? Lloyds Bank offers three useful tips.

1. Great deals don’t find you

Scammers are likely to post adverts for scam investments on social media and the Internet. Some might also send you deals via direct message, either by email or phone, with returns that you can’t get anywhere else. If a deal seems too good to be true, and especially if it appears out of nowhere, it is most likely a scam.

2. Make sure it’s genuine

According to Lloyds Bank, fraudsters can easily set up bogus companies, profiles and websites in order to clone legitimate businesses. Before investing in any company, visit the FCA website to get genuine contact information and links to their website.

Conduct your own research on the company and look at what others are saying about it in the reviews. If you don’t have the time or desire to research your investments but want to avoid scams, consider using an FCA-approved and regulated robo-advisor such as InvestEngine or Wealthify.

3. Protect how to pay

Most scammers will ask you to pay via bank transfer because once you’ve paid via this method, it’s usually very difficult to get your money back. Payment by credit card provides greater protection because, according to Section 75 of the Consumer Credit Act, the credit company is jointly liable if something goes wrong with a transaction.

Also, before you make a payment, look out for potential red flags. For example, if you’re asked to pay into an account that has a different name to that of the broker you’re investing through, it’s a big sign that you might be dealing with a scammer.

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