Financial Fraud - A Guide to the Common Scams and Schemes

Financial fraud in the UK has reached unprecedented levels, with recent press reports exposing the widespread impact on individuals and businesses alike. The frequency and scale of financial scams have reached alarming levels, especially in sectors like cryptocurrency and online banking. UK Finance latest fraud report revealed that £1.17 billion was lost to fraud in 2023 and it’s half year fraud report for 2024 shows that there has been no slowing down, with an estimated £570 million stolen in the first six months of 2024.

Financial frauds and scams are principally cyber-crimes and mainly enacted initially through social media. The Crown Prosecution Service (“CPS”) states in its Economic Crime Strategy 2025 progress report “…Fraud accounts for over 40 percent of all crime. It is estimated that over 80 percent of fraud reported nationally is ‘cyber-enabled’ and over 70 percent either originates abroad or has an international element…”

Joanna Bailey, head of Giambrone & Partners’ banking and financial fraud litigation department, stated “cryptocurrency-related fraud has seen a significant spike. As the various reports reveal, financial crime in the UK is evolving rapidly and the pursuit of the fraudsters must also match the agility of the wrongdoers.” Joanna further commented “Some steps have been made and more are planned towards addressing the onslaught of financial crimes, such as the Online Safety Act which introduces stricter penalties for online platforms if they do not implement protective measures for users, the proposed creation of a National Fraud Squad with additional powers to seize and recover criminal crypto assets through the Economic Crime and Corporate Transparency Act and Giambrone & Partners success in persuading the Courts to serve proceedings on Persons Unknown connected with two digital wallets over the blockchain by non-fungible token or ‘NFT’ in a cryptocurrency fraud, are all important steps in the fight against fraud.”

A cohesive comprehensive effort between the financial sector, online platforms and regulatory bodies together with public vigilance is required to combat the threat. Ben Donaldson, the managing director at UK Finance commented “Fraud continues to pose a major threat…this isn’t a fight we will win alone…criminals will keep adapting, which means we all need to remain focused on reducing fraud.” 

Once fraudsters make contact with an individual they think is a suitable victim they invariably suggest moving from the platform that they are engaging with the victim to another means of communication. This will almost certainly be far more urgent in future as the platforms will now have legal duty to protect their users from fraud. This will be a “red flag” sign that you are being targeted by a wrongdoer.

Giambrone and Partners banking and financial fraud lawyers fully understand the devastating consequences of financial fraud to the victims and have developed strategies and tactics to increase the chances of recovering funds lost to fraud.

Many victims are unaware of the nature of the scams and frauds and therefore do not recognise when they are being targeted. Below are some of the many methods that wrongdoers use to defraud their victims. If you have been affected by any of the schemes listed below, Giambrone and Partners experienced banking and financial fraud lawyers may be able to help recover your lost funds:

Romance Fraud

One of the most heartless types of fraud where scammers prey on vulnerable individuals to draw them into an online relationship. The fraudster often makes approaches through an online dating site and takes time to build the victims trust manipulating their target emotionally through a web of lies. Face-to-face contact is avoided at all costs by the pretence of living in a remote location or working in a covert organisation. 

Once the scammer feels that the victim believes that they are in a genuine relationship and therefore trusts them, depending on which type of approach is used the fraudster may ask for money for an “emergency.” Frequently, to create a sense of urgency, it is a supposed medical emergency such as a relative has had a serious car accident and requires urgently requires surgery to save their life.

Alternatively, scammers may say they are stranded in a foreign country and need money to return home due to issues like theft, lost documents, or legal issues. They may suggest sudden financial difficulties have arisen such as needing help to complete a business deal or facing unexpected costs. They may claim that it is a temporary loan will be paid back later with interest.

Investment Fraud

Whilst there have been steps recently to tighten the rules relating to the investment sector and the position is constantly being reviewed by the Regulators in light of the new types of fraud as the scammers are adept at modifying their frauds. The volatile cryptocurrency market has been a particular favourite for fraudsters for some time. As with many scams and frauds, the initial contact is made through social media. A friendly “account manager” gains the victim’s confidence and quickly establishes their lack of knowledge on how the investment market operates and the regulations that apply. They also make sure that the victim does not have any friends or relatives that are aware of how the markets work and are likely to spot the scam. Once the account manager feels safe the target is promised impossibly high returns on investment in “get rich quick” types of schemes. Usually the target is encouraged to make small investments initially which appear to be successful and make profits, the target is led to believe that money is accruing in their account. In some frauds the scammers may send back money, leading the victim to think that they have a return on investment. Many victims allow their account manager to take over their computer.

When the victim seeks to have access to the “money” accrued as a result of their investments, their account dramatically falls into loss. This triggers a frantic effort to persuade the victim to invest more and more to “trade” out of their losses. Often telling them if they do not continue to “invest” they will lose everything. A pattern of small gains and dramatic losses is often maintained by the “account manager” until such time as the fraudster recognises that there is no more money available, they then disappear leaving the victim financially ruined and not knowing what they can do to recover their lost funds.

“Professional” Investor fraud

The Regulators of the financial and investment markets have strict rules to prevent novice investors losing their money due to a failure to understand the market and investment brokers and other financial advisors are obliged to identify their investors as novice of professional traders and there are limits on the types of financial trading they are allowed to conduct which eliminates the complex types of trading. 

Increasingly, dubious investment brokers are contacting individuals with whom they have had dealings with previously and inviting them to continue trading on a different more lucrative basis, elevated to the capacity of a professional trader. The novice investor is advised as to how to complete the application form which invariably contains obtuse questions framed in such a way that the person completing the form would not be able to recognise the implications of the change of status and also the fact that, as professional traders, they then lose the safety net Regulators have provided for inexperienced investors. 

When inevitably the target becomes aware that they have lost their money, they are told that this is entirely due to their own decisions.

Recovery fraud 

This occurs when an individual has been defrauded and the original fraudsters, being fully aware of the victim’s losses, contact them again in a different guise and offer to recover their lost investment – in exchange for an advance fee. 

Influencer fraud

This type of fraud involves social media platforms such as Tik Tok and Instagram where “influencers”, often minor particularly celebrities, are paid to promote an investment scam. The individuals fronting the scam may not have any knowledge that it is a scam, often promoting the investment scheme without having made any enquiries into the validity of the schemes they are promoting. Novice investors recognise the celebrity and are swayed by the celebrity’s association with the scheme and think that it legitimate.

There are occasions when the celebrity is completely unware that their name is being used to draw people into fraudulent investment schemes.

Pump and Dump schemes

This type of scam applies to cryptocurrency digital asset sector. The fraudster artificially inflates a low value stock, often listed in the Alternative Investment Market (“AIM”) and then runs a hard-sell campaign at a far higher price – the pump – and then as the price peaks the fraudster sells all their stock leading to a collapse.

Initial Coin Offering (“ICO”)

An ICO scheme seeks investors for a new cryptocurrency promising low risk high returns. They are very similar to Initial Public Offering (“IPO”) where a new company offers stock to buy for the first time. An ICO closes when the victims are unable to access the promised returns.

Giambrone & Partners banking and financial fraud litigation lawyers fully understand the devastation and long term financial loss that scams create. Our lawyers have had considerable success in tracing and pursuing the wrongdoers through the courts. If you believe you have been scammed Giambrone and Partners may be able to help you.

Joanna is a partner who heads our banking and financial fraud litigation department.she frequently leads the litigation against financial institutions involved in cryptocurrency trading disputes, as well as Forex investment issues and regulatory investigations and has some considerable success in retrieving our clients' funds lost in fraud.

She has developed a range of strategies both to find the assets of the individuals perpetrating the fraudulent schemes and restore the funds to our clients. As well as recognising culpability in the organisations facilitating (but not associated with the fraud), by failing to undertake adequate due diligence.

Joanna led the first case in Europe where proceedings were served on Persons Unknown connected with two digital wallets over the blockchain by non-fungible token or ‘NFT’ in a cryptocurrency fraud. Following this ground-breaking case Joanna was named as Lawyer of the Week in the Financial Times.

Joanna is highly experienced in high-value out-of-court settlement negotiations and has in-depth knowledge of the Civil Procedure Rules as well as English common law.

If you think you have been scammed and would like to know more about how Giambrone & Partners can help you please contact Joanna's clerk Joseph Crick, on JC@giambronelaw.com or please click here.