Investment scams: warning signs and how to verify a firm
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In short. Almost all UK investment scams share three features: a promise of high returns with little or no risk, pressure to invest quickly, and an unauthorised or cloned firm. Three checks before you invest — verify the firm on the public authorisations register, search the regulator's warning list for reported clones, and walk away if anything doesn't match — catch the vast majority of investment fraud.
UK Finance reported £612m in investment fraud losses across 2024. Cryptocurrency investment scams dominate new reports; 'clone firm' fraud (using the name of a real authorised firm) and 'recovery room' scams (offering to recover money for a fee after a first scam) are also common.
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Warning signs
- Returns of 8%+ a year described as 'guaranteed' or 'risk-free'
- Pressure to invest 'before this round closes' or with a deadline
- Cold-call, social-media DM, or unsolicited WhatsApp introduction
- Crypto, foreign exchange (forex) or 'CFD' trading platforms you've never heard of
- Glossy website with no FCA reference, or an FCA reference that doesn't match on the register
- Asked to pay a 'tax', 'release fee' or 'verification fee' before withdrawing 'profits'
- Investments in unusual physical assets — land, parking, storage, wine, carbon credits, hotel rooms
Clone firms
Clone firms copy the name, FCA reference and sometimes the website of a real authorised firm, then add a slightly different phone number, email or bank account. The regulator's warning list flags reported clones; always cross-check the contact details on the public authorisations register with whatever the firm has sent.
Three checks before you invest
- Search the public Financial Services Register for the firm's name and reference number — use only the contact details listed there, not those the firm gave you
- Check the regulator's warning list of unauthorised firms and reported clones
- Walk away if the firm isn't authorised, pressures you to decide quickly, or promises guaranteed returns — you won't have FSCS or Financial Ombudsman protection
FAQ
- Are cryptocurrency investments regulated by the FCA?
- Most crypto trading is not regulated by the FCA for consumer protection (firms providing crypto services in the UK must register for anti-money-laundering purposes, but that doesn't include FSCS cover). The FCA's consistent guidance is that consumers should be prepared to lose all the money they put into crypto.
- Will FSCS protect me if I'm scammed?
- FSCS only covers losses from authorised firms within scheme limits. Money invested with an unauthorised firm — including a scam clone or unregulated overseas platform — is not protected.
- What's a 'recovery room' scam?
- After someone has been scammed, a second 'recovery' firm contacts them claiming to be able to recover the money for an upfront fee. These are almost always second-stage fraud. The FCA, Report Fraud and an authorised solicitor are the only legitimate routes to pursue recovery.