Investors lose millions from online investment scam
Investors duped by an online investment scam have seen their losses rocket over the last five years.
According to Action Fraud, the amount of money investors have lost through ‘binary options’ – which target investors through social media – has shot up by 400% in the last six years from £6,200 to £27 million.
Binary options essentially place a bet on whether the price of a share, stock market or other asset will be above or below a set price in future. Every bet has only two possible outcomes: get it right and you’ll win your stake back, plus profits of 50% to 90%. If you’re wrong, you lose the lot.
The products first appeared a decade ago and the industry has grown to hundreds of companies.
The sector is currently not supervised by the Financial Conduct Authority (FCA), but this will change at the start of 2018 when the regulator takes it under its watch.
The total lost by investors since binary options first appeared on the scene stands at £61 million.
Last November Consumer group Which? described binary options as the UK’s ‘biggest investment con‘ after an investigation into the product.
‘There are some legitimate companies selling binary options, but even the genuine products should be considered gambling, not investments,’ Which? said in its study.