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Which? is warning Instagram and Facebook users to be wary of investment scams after seeing dodgy ads appearing on these platforms.
Investment scams are when fraudsters lure victims into transferring their money into accounts controlled by them, but disguised as investments.
Sometimes, scammers will show you fake returns on your investments so that you keep putting in more money. Other times, they will offer ‘trading advice’ as a way to lure you into larger dodgy schemes.
In the first half of 2023, UK Finance reported 5,112 cases of investment scams with losses totalling £57.2m.
Fraudsters are known to use online platforms, such as Instagram and Facebook, to create scam ads and target consumers at scale. Recently, Revolut said that six in 10 scams reported to it by UK customers came from Meta platforms (Meta being the parent company of Facebook, Instagram and WhatsApp).
Below, we highlight two fake investment ads on Instagram and Facebook.
Fake investment adverts
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The ads feature unsupported claims of being recommended by well-known investors.
One of the ads uses Terry Smith’s image, the founder and CEO of Fundsmith, a London-based investment management company. The advert invites you to join a ‘Terry Smith Free Master Investing Course’.
Another similar advert uses Cathie Wood’s image, who founded American investment management firm ARK Invest. This ad also encourages you to sign up to a group.
We contacted Meta about these ads. It couldn’t find the advert which used Terry Smith’s image, however, it informed us that it removed the Cathie Wood ad for violating its policies.
‘VIP’ WhatsApp groups
Upon joining the groups, which each had around 100 members, we were spammed by dozens of messages from one of the group admins with ‘stock updates’ written with poor grammar and containing a lot of jargon. These updates were sent on a daily basis.
The group’s administrator was also insistent that members contact the investment assistant via WhatsApp to join the ‘VIP experience group’.
Currently, members are ‘trial members’ for 100 days, so the recommended stocks are free. However, after that, members are asked to sign a contract to join the VIP group and will be charged a 2-5% commission on stock profits.
We contacted ARK Invest, which told us that it is aware of scams and impersonations online and across various social media channels, including YouTube, Facebook, Instagram, LinkedIn, WhatsApp and X.
It also said that Cathie Wood profiles do not sponsor posts on any platform and that ARK Invest and Cathie Wood do not use Telegram, WhatsApp, Messenger, or similar messaging services.
On its website, Fundsmith warns of ‘fraudulent WhatsApp groups … purporting to be from members of the Fundsmith team suggesting trading ideas, requesting money transfers or asking you to click a link to download a file’.
It states that ‘Fundsmith will never provide advice or use WhatsApp to communicate with clients’.
We contacted Fundsmith and it told us that the ad is a scam and it is engaging with Meta to try to get these ads taken down.
Avoiding and reporting investment scams
If you’re suspicious about an investment opportunity, here are some signs to look out for:
- Whether the company is registered with the Financial Conduct Authority (FCA) or on an FCA warning list.
- Being contacted out of the blue by the company.
- Being pressured or rushed to make a decision.
- Being promised unrealistic returns on your investments.
- Any type of romance being involved, such as someone from a dating app offering you an investment opportunity.
On Instagram and Facebook, you can report ads by selecting the three dots in the top right-hand corner and pressing ‘Report’.
On WhatsApp, you can click on the contact’s name or number, scroll down and press ‘Report’. To report groups on WhatsApp, click on the group name and press ‘Report.’
If you become the victim of a scam, call your bank immediately using the number on the back of your bank card and report it to Action Fraud or call the police on 101 if you’re in Scotland.
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