The Financial Services and Markets Authority has issued a warning about a growing number of fraudulent investment schemes circulating on social media platforms, including Facebook and Instagram. These scams often use misleading advertisements to trap individuals into WhatsApp groups that claim to share exclusive investment advice.

How the Fraud Operates

According to the FSMA, the advertisements typically offer free access to these groups. They promise insider tips on profitable investments. To appear credible, the ads are often posted from fake accounts that impersonate well-known banks, media outlets, or public figures.

This tactic is commonly referred to as “cloned firm fraud.” In some cases, individuals are asked to complete a form providing details about their financial situation or investment knowledge.

Common Characteristics of the Scams

The FSMA has identified several recurring features in these scams. These include unrealistic promises of high returns with no risk, offers involving fake initial public offerings or shares that are supposedly guaranteed to increase in value, and messages claiming the opportunity is only available for a limited time or to a select group.

Users may also receive pressure messages urging them to act quickly or risk missing out. Communication typically takes place through private messaging services such as WhatsApp or Telegram, rather than through official channels.

Scammers Impersonate FSMA in Recovery Scheme

In a related alert, the FSMA also warned about a separate scam targeting victims of previous investment fraud. In this scheme, scammers impersonate the FSMA and claim they can help recover lost funds, but ask for upfront payments under false pretenses. One such entity identified is Protectionline.

In 2024, the FSMA received 2,621 fraud reports, a 20% increase from the previous year. Losses totaled €15.9 million, with most linked to cryptocurrency scams and fraudulent trading platforms.

You may find it interesting at FinanceMagnates.com: Investors Tricked Into Recruiting Others to Keep Fake Trading Platforms Alive, FSMA Warns

Risks to Consumers

Although the WhatsApp groups may appear harmless or free at first, the underlying intention is often to convince users to invest in worthless assets or transfer money directly to the scammers. There is also a risk that personal data collected through these interactions could be used for identity theft or additional fraud attempts.

FSMA’s Advice to the Public

The FSMA advises individuals to take several precautions. Consumers should verify whether the provider is listed in the FSMA’s register. They should not rely solely on the appearance of a logo or a name, even if it matches that of a known financial institution.

Suspicious ads, forms, or social media profiles should be reported to the relevant platforms. The FSMA also warns against sharing personal data or engaging in any investment-related discussions through unofficial channels.