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Avoiding investment fraud
Whilst most people are aware of the notorious large-scale commercial frauds that have been uncovered, it is not commonly realised that private individuals are the direct victims of a large and increasing number of confidence tricks, deceptions and other fraudulent schemes.
Such frauds are rarely featured in newspapers or on television because they may seem insignificant, but the impact on the people concerned is extremely serious. It is quite possible, for example, to lose more money as a result of fraud than any other crime - and not just money - your pension, your life savings, even your home can all be at risk.
A fraudster is not easy to recognise. He (or she) could be the polite salesman who calls at your house; or that friendly-looking bloke in the pub who is willing to let you in on a sure-fire thing. He may be someone you know well and would not dream of thinking of as a criminal. Essentially the fraudster aims to convince you that giving your money to him is perfectly reasonable - whether it is for an investment, a purchase, a business proposition, or anything else.
Whilst there are many fraud schemes, their common characteristics tend to be that they promise a large amount of future wealth and depend for their success on your trust of the fraudster. It is this abuse of your trust that allows frauds to occur.
Cold Calling
Generally cold-calling for investment business is prohibited by law, so be wary of apparently generous offers which "turn up out of the blue".
Unusually high returns
Beware of schemes which offer unusually high rates of return when compared to, for example, the interest rates available from Building Societies. Generous offers may be just a means of arousing your interest in a dubious scheme.
Take your time
Never make a major financial decision or sign anything on the spot. Always take your time to consider what you are doing.
Get independent advice
Investment businesses are required to be authorised by the Financial Services Authority (FSA) to carry out investment business. As a general rule, don't get involved with an unregistered organisation. The FSA maintains a register of authorised businesses which can be easily checked.
Cash transactions
Be wary of individuals who insist on dealing in cash. The use of cash may indicate that proper accounts are not being kept. Be particularly careful about paying cash in advance.
Spread the risk
Do not "put all your eggs in one basket". For example, never commit all your life savings to a single investment scheme.
Overseas Organisations
Be cautious about investing in an organisation based outside the jurisdiction of the British Courts. In the event of difficulty it may be practically impossible to seek a legal remedy.
Avoid an obviously "dodgy" deal
Some fraudsters try to raise your enthusiasm by bringing you in on a scheme to avoid paying tax, or even to help them remove assets illegally acquired in another country. Remember that you are only being offered this "opportunity" so they can test your gullibility before you are set up as the victim of the fraud.
Finally,
Remember that if an investment opportunity seems too good to be true - it probably is!
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