Martin Lewis and Elon Musk don’t appear to have much in common. One is a trusted British personal finance guru; the other is the world’s richest person and a close ally of Donald Trump. However, their wisdom and wealth respectively make them a powerful weapon for scammers.
“I have the dubious honour … of being used in more scam ads than anyone else in the UK, even though I never do any advertising,” Lewis tells the Guardian.
“If you add in Elon Musk, between us we are the huge majority of scam ads,” says the MoneySavingExpert.com founder, referring to data compiled by Action Fraud, the UK’s centre for collating allegations of cybercrime.
Lewis’s status as a force for good means that when he offers advice, people take notice. As a result, fraudsters capitalise on his clout with the public to send what are “shortcut psychological messages”, he says. “I am there to portray ‘trusted financial source’, Elon Musk has ‘huge wealth’.”
This week, a Guardian investigation into a $35m (£27m) fraud shone a spotlight on the tactics that investment scammers use to cheat Britons out of millions of pounds every week.
The fraud was exposed by a huge leak of scam call centre data to the Swedish public broadcaster SVT, which shared the files with international media partners. Out of about 2,000 victims persuaded to part with the largest sums, 652 were from the UK.
So how can you, or your loved ones, avoid joining their ranks?
When it comes to investment scams, fake cryptocurrency tops the list, but scammers dangle too-good-to-be-true opportunities to buy other things such as gold, wine, property, carbon credits and land banking, where land is divided into smaller plots to sell to investors.
The latest data from the banking trade body UK Finance showed investment scammers cheated Britons out of £56m in the first six months of 2024. However, the true total will be much higher, as many victims do not report the crime, often because they feel embarrassed or ashamed that they were taken in.
These scams are usually a type of authorised push payment (APP) fraud, which involves tricking someone into voluntarily sending money from their bank account.
For the victims, it often starts by clicking on a (fake) social media advert or news alert. This typically is a tip for a supposedly great crypto investment, but is in fact a trick that leads only to fraudsters who are impersonating a real business.
Eager investors hand over a small sum at first, say £250, and before they know it – thanks to things such as sophisticated software that displays a seemingly live trading screen – they are getting rich.
With these types of scam, that “profit” is pure fiction, serving as bait: victims typically lose the big money trying to cash out. The “windfall” is always blocked by the need for another payment, be it a broker’s fee or a tax bill. It only ends when the victim is broke.
Along the way, fraudsters play on the idea that traditional banks and the government are suspicious of crypto and see it as a threat. This helps convince victims to mislead their bank about the true purpose of their transaction.
Meanwhile, the volatility of cryptocurrencies and the perception that people can become wealthy overnight provides the perfect cover for fraudsters. As a result, the number of crypto scams reported to the Financial Conduct Authority (FCA) has more than doubled since 2020, the financial watchdog says.
Faced with trying to combat this growing problem, the FCA carries a list of crypto scam “warning signs” on its website. It advises people to be “extremely cautious” if any of the answers to the following questions is “yes”:
• Have you been contacted out of the blue?
• Are you being put under pressure to invest quickly?
• Are you being promised investment returns that sound unrealistic?
• Are they trying to flatter you?
If you want to do your homework on an investment, start by checking whether the firm or individual is authorised. Almost all financial services firms in the UK must be authorised or registered by the FCA and will be on the Financial Services Register.
Another useful tool is the watchdog’s ScamSmart investment checker.
You should check that the firm’s reference number and contact details match those on the register. If there aren’t any contact details listed or the firm says they are out of date, call the FCA on 0800 111 6768. Remember, some firms pretend to be authorised, so always use the contact details on the Financial Services Register.
Meanwhile, Lisa Webb, a consumer law expert at Which?, says: “You can also use Google’s reverse image search to check if an image in an ad has been used elsewhere. Sometimes, deepfake videos are a compilation of images that already exist, so this is a good way to find the original and confirm that the ad you’ve seen is likely fraudulent.”
Also, whatever you do, do not give someone access to your device by downloading software or an app from a source you do not trust. Doing this could enable scammers to take control of your device and access your bank account.
The good news is that if you have fallen victim to APP fraud, you are now more likely to be able to get your money back from the payment firm you used. That is because new rules forcing banks to issue refunds up to a maximum of £85,000 came into effect in October.
There is also the option to raise your case with the Financial Ombudsman Service (FOS), which has a compensation limit of £430,000. It is a free service, and the FOS sets out the process that consumers should follow on its website.
“Many of the cases we see now involve cryptocurrency,” says Pat Hurley, an ombudsman director at the FOS. With many high street banks having blocked crypto payments, the organisation is also seeing increasing numbers of “multistage frauds”, he adds.
These are scams in which fraudsters encourage people to move money through different banks or other payment providers to make it easier for the victim to buy crypto as part of a fraudulent investment, says Hurley.
He adds: “People need to be vigilant when presented with amazing investment returns – particularly online. We see every day that the reality is that it’s often a scam.”
Victims are often dazzled by blockbuster returns. Unfortunately the returns delivered by actual real-world investments are usually less turbo-charged. When the investment platform Hargreaves Lansdown looked at the average annual return delivered by comparable investments over a 20-year period, it found that UK equities delivered 7%, while for tech stocks the figure was 16.4%. Going for gold delivered an annualised return of 11.2%.
“If you are shown an investment and told it can achieve much higher returns than these, you might want to ask yourself why?” says Victoria Hasler, the head of fund research at Hargreaves Lansdown.
“A higher return is usually compensation for more risk. For equities, you should expect long-term returns of around 7-10% per year,” she says. “Technology returns have been very high in the last few years, skewing the long-term average for the sector, but we wouldn’t necessarily expect that to continue.”
And what about crypto? Hasler is stern: “Hargreaves Lansdown does not offer any crypto currencies and has no plans to do so. The FCA has also banned the sale of crypto derivatives to all retail investors due to the harm they pose. Speculating in cryptocurrencies is extremely high-risk and shouldn’t be conflated with investing.”
She adds: “Celebrity endorsements are not good indicators as they can be easily faked and, even if they are real, they don’t guarantee that the person endorsing them has any particular investment knowledge.”
Many of the scam victims the Guardian spoke to had lost life-changing sums of money, a situation Lewis describes as “bloody awful”.
“The stories I’ve heard of people who’ve lost their life savings, and their self-esteem, due to these criminals are heart-breaking.”
Meanwhile, Lewis is blunt in his advice: “All I can say to the public is that if you see any celebrity advert on social media (or arguably any ads at all) you should assume it’s a scam until you have direct corroboration from a trusted source that it isn’t.”
