Investments: Money making scams targeting under-pressure Scots investors

At nervous times like these more people are likely to answer in the affirmative and the firms making the hard sell know it. There has been a resurgence recently in the proliferation of adverts, cold calls and spam emails offering investors the chance to take part in money-making trading schemes, currency bets and investment seminars.

And as the squeeze tightens on Scots facing low wage inflation and benefit cuts and worried about job security, more people are vulnerable to exploitation by allegedly lucrative trading schemes, according to Charles Fotheringham, senior investment manager at Gillespie Macandrew.

"This year it appears that there are more and more emails offering investment seminars to the public with the enticement that they can have a career change or by magic become stock market or foreign currency traders earning lots of money without committing too much time to the endeavour," he said.

• Investments: watch out

But many are scams and even those that are not seek to entice investors into taking a gamble that could go badly wrong.

Duncan Glassey, a partner in Edinburgh-based private wealth manager Wealthflow, said people with investment experience are more likely than those without to fall for scams. "Victims often recognise that there is something wrong with the offer, but the size of the possible prize or reward induced them to give it a try on the off-chance that it might be genuine," he noted.

Here are the principle investment scams to look out for.

Boiler rooms

These use high-pressure sales tactics to con investors into buying non-tradeable, overpriced or even non-existent shares. Those targeted are usually called out of the blue with an offer to buy into an obscure stock at a discount that maximises the potential growth.

Boiler rooms scams are sufficiently slick to have successfully conned hundreds of thousands of experienced investors into parting with millions in a bid to take advantage of the supposed growth opportunity.

Earlier this year the Financial Services Authority (FSA) and City of London Police wrote to hundreds of Scots warning them they were on a master list of shareholders being circulated among different boiler room operations.

If you do receive a suspicious call, ring the FSA on 0207 621 2222 to check the firm is regulated before you take it any further.

The risk is heightened by the fact that victims of boiler-room scams have no recourse to financial complaints and compensation schemes as the firms - often based overseas - are not authorised.Forex trading

Currency trading has boomed in recent years as investors have used internet platforms to try and profit from fluctuations in foreign exchange rates. But while many people have done well out of it, others have become victims of cons, which are proliferating by the week.

Some firms have sought to capitalise on the growing popularity of Forex trading by promoting seminars promising to teach investors how to make quick and easy money from it.

One group, Knowledge-to-action, asks potential investors if they have "ever dreamt of being a foreign exchange trader" and of having the "financial freedom to live the way you want to, having control of your own financial destiny and escaping the 9 to 5".

But becoming a successful investor in either foreign exchange, stock market or property requires experience and hard work and cannot be taught at a seminar.

"Remember that even experienced fund managers backed by analysts and huge resources still fail to out-perform the market on a consistent basis, so the chances of a member of the public attending some hidden stock market seminar is not likely to stand much chance of overnight success," said Fotheringham.

Investment seminars

Seminars held all over the UK on a daily basis promise to divulge the secret of making big profits with little effort and some are entirely legitimate. But many are nothing more than a sales pitch aimed at persuading people to plough all their cash into convincing-sounding business and investment opportunities. They often target older investors looking to boost their retirement pot.

Fotheringham commented: "These schemes are often advertised by unknown organisations with the sole objective of hard-selling those that turn up software or instruction manuals for several hundred pounds before you are even given access to the inner secrets (if, indeed, there any)."

One pertinent example is the Rich Dad, Poor Dad seminars playing on the popularity of the book of the same name written by Robert Kiyosaki. Rich Dad, Poor Dad seminars in North America and more recently in the UK have allegedly proved little more than a sales pitch for property investment schemes.

The seminars look legitimate because of its association with a reputable brand, but some Scots who attended sessions north of the Border earlier this year claimed they were conned.

Glassey said such schemes sought to exploit basic human desires and needs, such as greed, by using triggers that make potential victims focus on the huge prizes or benefits on offer.

"With the Rich Dad Poor Dad scam it was the promised millionaire lifestyle. Scammers make the offer appear unique, a once in a lifetime opportunity. They emphasise the urgency of a response to reduce the potential victim's motivation to process the scam content objectively," he said.

The difficulty for those who are tempted is in distinguishing scams from the genuine article.But one sure-fire way of being able to spot a con is to remember that if it sounds too good to be true, it probably is.

Fake firms

An alarming increase in recent months in instances of investors being duped by unregulated firms masquerading as well-known investment and banking brands has moved the Investment Management Association to issue new guidance on investment scams.

The danger is that the fakes can be very convincing, with fraudsters cloning the websites of authorised firms. Often the only change in details is to the contact numbers.

Firms including Schroders, Fidelity, Octopus Investments and Royal London Asset Management have had their brands used by fraudsters attempting to sell their own or other shares.

As in any potential scam case, the main advice is to avoid giving out any personal information over the phone or on email and to call back using the contact details listed on the FSA website.

• For more information: www.moneymadeclear.org.uk/scams