Why clients still fall foul of fraudsters
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.