Is inflation making more people vulnerable to scams?

Unfortunately, the cost-of-living crisis doesn’t seem to be going anywhere any time soon, and many all over the country are becoming under increasing financial pressure as inflation continues to bite.

With many now realising their regular income will only go so far as prices continue to hike, it’s understandable that people are looking for ways to generate additional revenue, such as by investing in certain stocks and assets.

However, what this is also means is some are becoming more and more susceptible to investment scams.

Why does inflation create a higher risk of being scammed?

Sadly, fraudsters are taking advantage of the current economic climate by using sophisticated methods to target financially vulnerable individuals.

Recent cases have seen scammers posing as investment advisers, promising big returns on investments including gold, bonds and gilts, cryptocurrency, property and stocks and shares.

With so many struggling financially, these ‘investors’ are seeing a lot of more consumers falling for the promises, that seem too good to be true, simply because they are really in need of a good return.

Studies show that 61% of those in the UK would agree to an investment that would gain them double their money in a year, whilst 8% would actually agree to invest straight away, without carrying out any research or necessary checks to avoid missing out on high returns. This is especially the case when a number of these investments are in vogue and there’s a fear that you maybe be missing out if you delay.

These figures are a huge cause for concern, as they show why the rate of successful scams are on the up – it is common for people to be drawn in by the ‘get-rich-quick’ promises without doing any due diligence.

Another pattern we’re starting to see is that young people are becoming more of a target, perhaps this is because generally they have less wealth and assets than the older generation, meaning they’re more likely to be swayed by these schemes.

Figures show that 16% of total investment scam reports in 2022 related to 25–34-year-olds, in comparison to 12% the previous year. This research also showed that scams involving those aged 65 and over fell from 35% to 25%.

How can you avoid this?

Whilst investment fraud is rising, we’re not saying you shouldn’t be investing, as this is an incredibly effective way of boosting your financial position. You just need to make sure that before you commit or sign up to anything, you get professional advice and conduct your own thorough research.

For example, if you’re being promised high returns by an ‘investor’ you can check if they’re a genuine and reputable firm by checking whether they’re authorised by the Financial Conduct Authority.

It’s no surprise that promises made by fraudsters turn heads, as they are attractive, especially if you’re in a bad spot financially. That’s why it’s extra important to make sure you take a step back before making a commitment.

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

WE make your wealth matter

If you’re looking to create additional revenue and think investing is the way forward for you, our advisors would love to help you through the process. All you need to do is get in touch with us here and we can get started!