Ombudsman highlights notable increase in investment and cryptocurrency fraud

[Brendan Burgess]

From their Annual Review of Complaints published today

The Overview of Complaints contains numerous case studies of complaints concluded in 2021, across the FSPO’s services. These case studies highlight trends, including a noticeable increase in the number of complaints made to the FSPO in the area of investment fraud and cryptocurrency where the financial and personal impact of these fraud incidents was very significant.

For example:

• · Philippa borrowed €20,000 to make a further investment in what she believed was cryptocurrency and later discovered it was a scam.
• · Pavel borrowed €20,000 through an overdraft and an online loan, after a fraudulent investment company told him his investment had grown to €5,000, and he needed to lodge €20,000 to retrieve it.
• · Cathal invested up to €20,000 with a fraudulent cryptocurrency investment.
• · Tom lost €60,000 over a period of 3 months, when he instructed his bank to transfer funds to what he believed was an investment platform, but which transpired to be a fraudulent company.
• · Noah lost €29,000 when he was tricked into using an incorrect IBAN, for his transfer of funds.

Commenting on the growth in complaints related to investment fraud, Ms. McGovern commented that “Global advances in technology across the digital world over the last ten years, have unsurprisingly, left many consumers at a disadvantage in terms of their digital knowledge. Consumers should be mindful of the risks posed by investing in unregulated activities, such as cryptocurrency trading, which very often carries a higher risk and level of volatility, than regulated product offerings. The widespread availability of financial services online creates opportunities for consumers to shop around and gain access to a wide variety of financial products. However, this also carries significant risks, if a consumer is not familiar with the financial service provider they are dealing with, or if the consumer does not understand whether that provider is regulated, and whether the protections afforded by the consumer protection framework, are in place.”