Is inflation making more people vulnerable to scams?

Dafferns Wealth

Households all over the country are under huge financial pressure as double-digit inflation continues to bite, and people are becoming painfully aware that their regular income will only go so far as prices keep heading up.

With that in mind, it’s understandable that many will be looking for ways to generate additional revenue, such as by investing in certain stocks and assets.

But as household finances are squeezed more and more, are some people becoming increasingly susceptible to investment scams?

Sadly, the answer is yes, as many fraudsters are taking advantage of the current climate by using increasingly sophisticated methods to target unsuspecting consumers.

By posing as a genuine investment adviser, they are promising people massive returns on investments like gold, bonds and gilts, cryptocurrency, property and stocks and shares.

And as people struggle with the cost of living, many are falling – or putting themselves in a position where they could fall – for promises that are too good to be true.

According to a new study by Nationwide Building Society, 61 per cent of Brits would agree to an investment if it promised to double their money in a year.

Meanwhile, eight per cent said they’d agree to invest straight away, without carrying out any research, to avoid missing out on high returns.

These are worrying figures, as they starkly demonstrate how easy it can be to be seduced by get-rich-quick promises without doing any due diligence.

Another concern is that scammers are increasingly targeting young people, perhaps because older individuals are often those with the biggest wealth and the most assets, and therefore less likely to be swayed by a get-rich-quick scheme.

Nationwide figures showed that 16 per cent of total investment scam reports in 2022 related to 25 to 34-year-olds. That compares with 12 per cent a year earlier. By contrast, the proportion of scams involving people aged 65 or above has fallen from 35 per cent to 25 per cent.

We would be the first to say that investing can be a hugely effective way to boost your financial position.

But equally, we’d stress that before committing or signing up to anything, you should get professional advice and carry out thorough research.

For instance, if you’re approached by someone making bold promises of high returns, you should find out if you’re dealing with a genuine, reputable firm by checking whether they’re authorised by the Financial Conduct Authority. i.e. by checking the FCA register

And if you suspect a potential scammer is posing as an established business, it’s a good idea to consult the watchdog’s register to see if the contact details match what’s listed there.

We understand that the promises made by fraudsters can turn heads, particularly if you’re under financial pressure and can’t see a way out. But it’s always worth taking a step back before making a commitment.

As the old adage goes, “If it seems too good to be true, it probably is”…

If you have any questions about investing to grow your wealth, please get in touch with our professional, regulated financial advisers. You can be sure that we’ll always act in your best interests, and base any advice around your specific needs and circumstances.

N.B. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.