How to avoid becoming the victim of Investor Fraud

The Gibraltar Financial Services Commission (GFSC) is promoting customer awareness of frauds and scams as part of the International Organisation of Securities Commissions’ (IOSCO) World Investor Week 2021.

Fraudsters typically promise high returns to entice investments in their scams. Once interest is shown, fraudsters change the initial prices on their website, trap investors with extreme pay-out clauses or cut contact and refuse to provide refunds.

The GFSC’s Regulatory Investigations team deals with firms purporting to be legitimate financial services firms and found that so far in 2021, 55% of unauthorised business activity was committed through suspected clone websites.

Sean Byrne, Head of Regulatory Investigations said: “Clone websites are set up by scammers that imitate real, legitimate companies using similar (or even the same) names and company information, usually mimicking the real website to deceive you into making investments. These clone firm websites often appear at the top of search engine pages, as scammers will pay to grab your attention. Please be careful and satisfy yourself you are dealing with a real firm before you invest.”

With growing scepticism on investment-related cold calls, fraudsters are now promoting themselves online through websites and social media. Customer reviews that appear on these online platforms are not evidence of a reputable entity as scammers are known to create professional looking platforms that feature fake customer testimonies, branding and even celebrity endorsements.

There are some of the things you can do detect and avoid being victim of a scam:

• Avoid “get rich quick” and “can't lose” schemes, especially if these are unsolicited. Remember, if it looks too good to be true, it probably is!
• If in doubt, seek financial advice from a regulated entity to establish the firm’s credentials before proceeding any further. To check if a firm offering financial services in Gibraltar is authorised visit the GFSC’s online regulated entities register at www.fsc.gi/regulated-entities. Additionally, check the warnings section of the GFSC website.
• There are many overseas scams. Ask where the company is based and enquire with the relevant financial services regulator. Be suspicious of requests that transfer money out of the country.
• If you are contacted unexpectedly and offered a "deal" but told to keep it to yourself, ask why? Fraudsters often include some exclusive benefit to make you believe like you have an advantage over other investors.
• Ignore pressure tactics to invest right away. Scammers often say, "act quickly, before it’s too late” to hurry you before you have had a chance to understand and take necessary precautions.
• Don’t give away your personal information. No credible financial institution will call you requesting your passwords or personal details over email or telephone.

The GFSC does not wish to restrict or discourage investments, but it is important to make an informed and well-thought-out decision with a clear understanding in the investment. Do not be afraid to ask as many questions as you feel necessary before making the decision to invest.

If you think you have been approached by an unauthorised company, please contact the GFSC Regulatory Investigations team on RegulatoryInvestigations@fsc.gi.