This warning came as cryptoassets (crypto) and forex investment scams reports more than tripled last year to over 1,800.
Fraudsters promise high returns from investments in crypto and forex, with victims losing over £27m in total in 2018/19.
The FCA says fraudsters often use social media to promote their ‘get rich quick’ online trading platforms.
Posts often use fake celebrity endorsements and images of luxury items like expensive watches and cars.
These then link to professional-looking websites where consumers are persuaded to invest.
Investors will often be led to believe that their first investment has successfully made a profit.
The fraudster will then contact the victim to invest more money or introduce friends and family with the false promise of greater profits.
However, eventually the returns stop, the customer account is closed and the scammer disappears with no further contact.
Action Fraud reports show that on average, victims were each scammed out of £14,600 from forex and crypto scams in 2018/19.
As part of the FCA’s ScamSmart campaign the regulator will be running advertising to raise awareness of online trading scams.
The ScamSmart adverts, which will appear on social media, will aim to make consumers more sceptical of ‘get rich quick’ trading scams promoted online.
Supported by the City of London Police, the FCA’s ScamSmart campaign encourages those considering an investment to check its dedicated website for tips on how to avoid investment fraud, www.fca.org.uk/scamsmart.
Director of Action Fraud, Pauline Smith, said: “These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms.
“It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.
“Action Fraud is pleased to be partnering with the FCA to raise awareness of online trading scams, and we hope it will help prevent more people falling victim.
“Remember, if you think you have been a victim, contact Action Fraud”
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms.
“Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal.
“Before investing online find out how to protect yourself from scams by visiting the ScamSmart website, and if in any doubt – don’t invest.”
The FCA provided a series of tips to “stay safe when scrolling”:
• Don’t assume it’s real– professional-looking websites, adverts or social media posts don’t always mean that an investment opportunity is genuine. Criminals can use the names of well-known brands or individuals to make their scams appear legitimate.
• Stay in control– avoid uninvited investment offers whether made on social media or over the phone. If you’re thinking about making an investment, thoroughly research the company first and consider getting independent advice.
• Make the right checks – Firms providing regulated financial services must be authorised by the FCA. You can check whether they are authorised on the FCA’s Register. Use the contact details on the Register, not the details the firm gives you, to avoid ‘clones’.
• Every report matters– If you have been a victim of fraud or cyber crime, report it to Action Fraud.
Reacting to the FCA announcement Laura Suter, personal finance analyst at investment platform AJ Bell, said: “Cryptocurrency is a scammers’ paradise, as many people ‘investing’ in these assets do little research and are sucked in by the promise of supersized returns in an impossibly short space of time.
“Using social media and the lure of expensive products to draw people in, scammers have made a fortune off their victims.
“Research from the FCA earlier this year found that people went into cryptocurrencies for all the wrong reasons, and getting rich quick was one of the main motivations for buyers – so it’s not surprising that scammers are capitalising on this.
“The scale of the losses are massive, with the average victim losing £14,600, and in many cases those victims will also have persuaded friends and family to invest too.
“Anyone handing over their hard-earned cash should make sure they understand what they’re getting into, they’ve checked it’s a legitimate investment, and not rely on hype and excitement from friends or social media.
She added: “Investing isn’t a get rich quick scheme – and anything that uses FOMO or requires you to invest before thinking is best to be avoided.”