Have you ever taken inspiration from Sherlock Holmes to avoid being scammed in your investments? Well, it turns out a quarter of UK crypto investors have! The Financial Conduct Authority (FCA) recently released a press release highlighting that 25% of investors who avoided a scam were able to do so because they took inspiration from the famous detective.

In 2022, these "armchair detective" investors saved over £2m by reporting suspicious firms or individuals to the FCA before losing money. It's great to see investors taking their financial safety seriously and being proactive in protecting their investments. (source)

The FCA also found that 39% of respondents claimed their investigative or research skills helped them spot potential scams, while 32% relied on their gut instincts to distinguish between genuine investment opportunities and potential scams. This is a good reminder to always do your due diligence when considering investment opportunities, whether it's researching the company, checking regulatory bodies' records, or seeking professional advice.

According to their research, "detective" investors found mistakes (34%) and requests for personal details (34%) as the most common warning signs of investment scams. Additionally, being contacted out of the blue (33%) and pressured to invest quickly (26%) were also flagged as suspicious.

The FCA surveyed 1,036 investors who avoided scams and found that a third (33%) of them were targeted via email, while a quarter (25%) received a personal phone call. When investors realized the investment opportunity was a fraud, 42% warned their family and friends, and 27% posted on social media to warn others.

It's important to be ScamSmart and always check the FCA's Warning List before making any investment decisions. This can help identify potential scams or unauthorized operators or highlight areas where additional research may be necessary.

It's important to remember that if you deal with an unauthorized firm, you won't be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if anything goes wrong. This is why it's essential to do your research and ensure you're dealing with a legitimate and authorized firm.

To help keep investors aware of the warning signs, the FCA has created an Augmented Reality (AR) experience that you can use on your mobile, including Instagram. The AR experience features everyday objects that represent the main warning signs of investment scams. This is a great way to help educate and remind investors of what to look out for when considering investment opportunities.

As investors in cryptocurrency, it's crucial to stay informed and be aware of potential scams. Don't fall for high-pressure tactics or promises of quick and easy returns. Always do your research and only deal with authorized firms to protect yourself and your investments.

Phone – Unexpected contact: scammers can cold-call or text, but contact might also come from online sources, or in person such as at an exhibition or seminar.

Piggy bank – Unrealistic returns: scammers often promise tempting returns that sound too good to be true.

Clock – Time pressure: scammers might offer you a bonus or discount if you invest before a set date.

Book – False authority: Scammers might use convincing literature and websites or claim to be regulated (or authorized) by the FCA when they’re not.

Leaflets – Social proof: scammers might share fake reviews and claim other clients have invested. It’s important to know how to spot the other warning signs:

Unexpected contact: traditionally scammers cold call but contact can also come from online sources, e.g., email or social media, posts, word of mouth, or even in person at a seminar or exhibition.

Time pressure: they might offer a bonus or discount to invest before a set date or say the opportunity is only available for a short period. Exclusivity or

: they might claim that you have been specially chosen for an investment opportunity so keep it to yourself.

Social proof: they may share fake reviews and claim other clients have invested or want to take up the deal.

Unrealistic returns: fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere. However, scammers may also offer smaller, more realistic returns to seem legitimate.

False authority: using convincing literature and websites, claiming to be regulated, and speaking with authority on investment products.

Flattery: building a friendship to lull people into a false sense of security.

Remote access: scammers may pretend to help and ask people to download software or an app so they can access your device. This could enable them to access your bank account or make payments using your card.

If you have any concerns about suspicious approaches you have received Coinpass would strongly advise you to visit the FCA’s ScamSmart webpage or contact our Support Team at support@coinpass.com.

As always, it's important to do your own research and trust your instincts. If something seems too good to be true or feels off, it's always better to be safe than sorry. Stay vigilant, and don't hesitate to report any suspicious activity to the proper authorities.

Stay safe and invest wisely!

Suggested Readings:

How To: Protect Yourself From Crypto Scams

Remain Diligent About Financial Fraud

FCA bans the sale of crypto-derivatives to retail consumers

What is the FCA Crypto List?