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Why clients still fall foul of fraudsters

24th May 2019
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It is an old maxim that there is one born every minute but columnist Philip Fisher is still astonished to discover that there are so many rich mugs out there waiting to part with their money.

Using information provided by Action Fraud, the Financial Conduct Authority has discovered that rich punters parted with £27m last year on the promise that they would make massive returns on cryptocurrency and foreign exchange investments.

To keep up the platitudes, there is no fool like an old fool when it comes to throwing money away.

Like those scam Nigerian prince begging emails of a decade ago, anonymous individuals contacted potential “investors” through social media and other direct channels.

To give the scammers credit, they did not just take the money and run. In these cases, the modus operandum was apparently to get a relatively modest investment, claim that it shot up in value and then hit the punter right between the eyes with a request for much more.

They would also offer incentives such as cash or those ubiquitous iPads to their victims in return for pyramid selling the plans to their friends and relations.

What gets really good about this story is that not only were many of the punters left out of pocket by amounts that average £14,600 but they would also have gulled their loved ones into doing exactly the same. How could you look your brother-in-law, golf chum or the supporter with the seat next to yours at Arsenal in the eye after helping them get robbed?

It is very difficult for the writer to avoid sounding sanctimonious and there has to be every chance that, at some point, he will have his pocket picked by someone offering a scheme very little more plausible.

To make things clear though it is worth using another parallel. If a stranger came up to you in the street this afternoon and asked you to give them £20, promising that they would meet you at the same place a day later with a bright new £50 note, would you invest? Of course not.

The point is that using the prudent skills generated by a life in the accountancy profession, not to mention a dash of common sense, it is very hard to understand how any of us could ever fall foul of fraudsters using techniques of this type.

More pertinently, all of us have clients and some of them may not have trained in the profession. Perhaps this would be a good time to make a short phone call or send a brief email explaining that scams of this kind are currently in the news.

It might be a good idea to go a step further, suggesting that should any client receive a money-making opportunity that sounds too good to be true, we would be happy to advise them about the necessary steps to verify the potential investment.

Alternatively, you could always get involved in pyramid selling of fraudulent investment plans and make your money that way. Perhaps not. As a better alternative, you might well know a very good IFA who could help a client with a few thousand to spare and an address book filled with the names of similarly-minded rich friends.

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By David Gordon FCCA
24th May 2019 10:54

Accountants are paid to be cynical. If we know our job clients will ask our advice and, then go off and do their own thing.
Nigerian princes notwithstanding, I advised my client, who was almost cheated in a business scam,(Almost being the word, thank heaven)
i told him do not feel bad about this. Reality is that 99.999% of ordinary persons, and our clients, are virgins in this matter. They go about their ordinary business in an honest manner dealing with others who do likewise. If it were not so, society would collapse.
This is one of the pleasant facts of my professional life over five decades. So, except and unless something happens -Heaven forefend- it is not part of their mindset.
It is therefore part of my job to strike a balance between helping keep them safe, and turning them paranoid.

Unfortunately people do get caught out, at that point they are no longer "Virgins" in this matter, so will more careful in the future.

Nevertheless it is not true, and not constructive, behaving as if you live in a world where everybody and his uncle are out to "Screw" you.
Just carry an umbrella, but live as if the sun is shining.

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By Vaughan Blake1
24th May 2019 15:13

Nearly (close but no cigar) got caught myself a few years ago. I had invested in a legit company with a very innovative product. Sadly it didn't work out and it dwindled to nought. I had a call naming both me and the company involved advising that the company had sorted its problems and I now owned 20,000 shares in the newco that had rescued it, and they were worth 10 times the amount originally invested. Would I like to sell these secretly as the purchaser wished to stage a takeover.

We must have been a good five minutes into the call before the penny dropped that it was a scam. Nice try, very imaginative and well researched.

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Hallerud at Easter
By DJKL
24th Jun 2019 21:58

My nearest was being at the wrong side of a purchase of shares in a company listed in Hong Kong, I was fortunate that I spotted before it went totally belly up that the debtor/sales ratios were starting to look strange and bailed out with a modest 25% loss but it could have been a total write off if I had not started to sense an aroma from the reported figures.

Some of the film schemes seemed plausible at initial meetings until common sense got applied, as did a few other marketed tax solutions of the late 1990s/ early 2000, lots of glossy pictures, reputable names, but always coming down to natural cynicism steering us away from such ideas.

Greed is a powerful driver of latent stupidity.

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By LostinSuspense
25th Jul 2019 13:01

The problems is that there are some scams that, for us in the UK are easy to spot (Americanisms used) where little effort has gone in akin to a blunderbuss to shoot an elephant at 100m.

This breeds an element of complacency which means those who use the rifle approach to shoot the said poor elephant probably have a greater chance of success as they put in that little more effort towards selecting their target and hunting them.

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By Reva134
16th Nov 2019 06:36

I had invested in a legit company with a very innovative product. Sadly it didn't work out and it dwindled to nought. I had a call naming both me and the company involved advising that the company had sorted its problems and I now owned 20,000 shares in the newco that had rescued it, and they were worth 10 times the amount originally invested. Would I like to sell these secretly as the purchaser wished to stage a takeover. https://myfedloan.us/

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