How to spot scams.

16th December 2016

Jonathan Watts-Lay, Director, WEALTH at work, joined leading experts to discuss how to spot scams. In particular, This is Money wanted to learn more about recent airport parking scams.

“A firm has emailed me about buying an airport car parking space, which it says would give me a guaranteed minimum return of 8 per cent a year. It says that a RICS valuation has been done and the parking space is being sold below its market value.  I’m wary as I know about stocks and funds but I’ve never held this type of investment. Is putting some of my savings in an airport car parking space a good idea?”

Jonathan Watts-Lay discusses what individuals should look out for when spotting a scam and why if it sounds too good to be true, it probably is.

Watts-Lay comments “In our financial education seminars we always say that if something looks too good to be true, it probably is. At this time, with low interest rates, these offers are incredibly tempting, but it just isn’t possible to guarantee minimum returns of 8% a year. Anything that promises such high guaranteed returns is almost certainly a scam At best, the car park may actually exist, but it is highly unlikely to give the returns suggested.

At worst, once money has been ‘invested’ the company may just disappear, or it may be what is known as a Ponzi scheme. This is where there is no actual investment, and instead investors are paid returns with their own money, or money paid by subsequent investors.  These can go on for years until the number of new investors dries up and the scheme collapses.

These types of scams often follow a similar format. They offer a guaranteed return, which should always be considered suspicious. They are also often in areas which are difficult to check, whether it be developments overseas, Gold mines, Planting trees in South America, or even Ostrich Farms.

Unfortunately, it is always the same old story, with the unscrupulous identifying an area where people are vulnerable, and swooping in with an offer of ‘guaranteed’ returns. Many people have been caught out by scams like this; unfortunately they weren’t the first, and sadly they won’t be the last.

The rule is, whatever investment you are planning to make, check out the company with the FCA first https://register.fca.org.uk/. If they haven’t heard of them, you will have no place to go if they turn out to be fraudsters. You can also visit the FCA’s ScamSmart website which includes a warning list of companies www.scamsmart.fca.org.uk ”

To read to the full article in This is Money, please click here.