The financial regulator of the United Kingdom is issuing a new warning for consumers regarding bitcoin and other cryptocurrencies that are seducing people into online scams.
The Financial Conduct Authority (FCA) has said that investors are currently being targeted by some fraudsters on social media platforms including Instagram, Twitter, and Facebook compared to more than they are over the phone, provoking people to invest cash into cryptocurrencies and other financial products including the likes of contracts for difference (CFDs), forex, and binary options.
Scams on binary options caused various investors to lose almost £90,000 per day in 2017, fresh figures from the watchdog expose, with figures of fraud revealing that younger people are more likely to become a victim of fraud that involved binaries compared to any other product.
Binary options came under the regulation of the FCA at the start of the new year. The regulator discovered that almost ninety companies are still offering them without authorisation. European financial authorities are contemplating a ban on selling them to retail clients.
Also, in general, young people are more at risk from scams that are performed online, with additional research that was conducted by the FCA discovering that those that are under 25 years old are six times more prone to trust an offer regarding online investment advice compared to those whose ages are over 55. Normally, older people have been the greater targets for scams on financial products.
Mark Steward, the director of enforcement of the FCA, stated: “As people have become more sceptical of investment-related cold calls and consumer habits have changed, we have seen investment fraud moving online and to social media.
“While their websites and profiles appear to be professional, they are all too often run by fraudsters who fix prices and pay-outs, or in some instances don’t really place trades at all, before disappearing with innocent investors’ money.”
Steward continued: “Before investing online, check you know who you are really dealing with and check if they are authorised by the FCA. Find out how to avoid scams on the ScamSmart website, and if in any doubt – don’t invest.”
Nick Hewer, the advisor to Lord Sugar on The Apprentice, stated: “It’s vital for all those on social media to be extra cautious about engaging in any conversations or with adverts that relate to quick-wins or guaranteed returns, especially with individuals or companies you do not know.”
Hewer added: “Remember, if it sounds too good to be true, then it probably is.”