The UK's financial regulator is issuing a fresh warning to consumers over bitcoin and other cryptocurrencies that are luring people into scams online.
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The Financial Conduct Authority (FCA) has said investors are now being targeted by fraudsters on Facebook, Instagram and Twitter, more than they are over the phone, tempting people to put cash into cryptocurrencies and other financial products such as binary options, contracts for difference (CFDs) and forex.
Binary options scams caused investors to lose nearly £90,000 a day last year, new figures from the watchdog reveal, with fraud figures showing younger people are more likely to be a victim of fraud involving binaries than any other product.
Read more: More than half of people say bitcoin will drop or collapse in six months
Binary options came under FCA regulation at the start of the year. The regulator found that nearly ninety firms are still offering them without authorisation. European financial authorities are considering a ban on selling them to retail clients.
And young people are more at risk from online scams in general, with further research by the FCA finding that under 25s are six times more likely to trust an offer of investment advice online than those ages over 55. Traditionally, older people have been greater targets for scam financial products.
“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," said FCA director of enforcement Mark Steward.
“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.
Read more: Spreadbetters shrug off FCA claims customers are at "serious risk of harm"
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,” he said.
Advisor to Lord Sugar on The Apprentice, Nick Hewer, said: "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."
He added: “Remember, if it sounds too good to be true, then it probably is.
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