Lockdown has led to the Rise of Scams using Fake Affiliate Marketing on Social Media Platforms

Joanna Bailey an associate in Giambrone’s banking and finance team was interviewed by Mobeen Azhar for the BBC’s four-part series called “In Scam City: Money, Mayhem and Maseratis” which examines how investors are approached on WhatsApp groups by unlicensed and unregulated “so-called” traders and duped into parting with large sums of money before recognising that they have been tricked and the traders are not regulated by the Financial Conduct Authority (FCA).

The rise in the use of influencers and celebrities to manipulate novice investors into to investing in what transpired to be non-existent investment schemes has spiralled during the lockdown and the number of complaints made to Action Fraud is threatening to overwhelm the service.

Low-level social media influencers are being paid to promote fraudulent brokers schemes, known as affiliate marketing, involving being paid a fee for putting business in the hands of the brokers. The target market is persuaded by displays of wealth such as flashy cars, expensive watches, designer clothes and being photographed at luxurious restaurants and hotels into thinking that the individual has made considerable amounts of easy money by investing with a particular broker. Using plausible pitches by familiar individuals who are often of the same generation, the novice investors are persuaded that they too can capitalise on the high returns.

Joanna Bailey commented “there is another aspect to “affiliate marketing” where the names of individuals with a high media profile are being used in the promotion and validation of scams, unknown to the person concerned. The National Cyber Security Centre (NCSC) removed more than 730,000 websites promoting fake endorsements” Joanna further remarked “in the current climate many people are in a difficult financial position with the effect of the coronavirus pandemic causing widespread job losses. These types of scams persuade people that they can make unrealistic returns on their investment which they believe due to the celebrity endorsement”.

Martin Lewis the financial journalist and Sir Richard Branson are the most frequently used names in fake celebrity endorsement according to Ian Levy, the NCSC's technical director. Fraudulent brokers use the reputation of trust built up by others to deceive their victims. The highly experienced lawyers in Giambrone’s banking and financial team strongly advise the utmost caution before considering investing in a scheme, particularly if you have no experience in investment markets. The Financial Conduct Authority (FCA) has a register of legitimate organisations sanctioned by the FCA as well as a page listing warnings regarding fraudulent firms that are unregulated, together with a page providing guidance and information about misleading financial promotions and how to recognise fake from the genuine and how to report an organisation you suspect is irregular and misleading.

If you suspect that you have invested in a fraudulent scheme or you have attempted to withdraw money and have been prevented from doing so by being told that your account will be closed and you will lose everything, the lawyers in Giambrone’s banking and financial team can advise and guide you. Giambrone has developed a number of strategies to assist investors who have been duped, including successfully mounting class actions to enable the restoration of our clients’ lost funds. Our lawyers have a well-deserved track record of recovery of our clients’ money.

If you are approached to invest in a scheme with a high return on investment thoroughly research the broker via the regulating bodies and company information. Also research the principals of the organisation to establish, not only their background and where they are based but also to establish whether they are using pseudonyms.

For more information on Forex fraud please click here.