DTI warns of bogus investment scams

A new scheme is being launched by the Department of Trade and Industry (DTI) to warn people about bogus investment schemes that have seen consumers lose millions of pounds to fraudsters.

Among the most popular scams doing the rounds are offers to buy shares, art, wine and jewellery – even property – for investment, all of which turn out to be worthless.

The DTI estimate that the sums of money lost to conmen may be as high as £350m, with £200m of that spent on property and £10m on art.

The internet is a popular conduit for scammers to reach potential victims – the 419 scam, which started life as via the phone and fax, really took off when rip-off merchants found they could contact people more easily and cheaply with email.

It's a problem that's not just affecting British investors – earlier this year, the FBI reported that 419s were causing the biggest single losses out of all internet fraud.

Often, says the DTI, those who get taken in by the fraudsters are those who can afford to lose it least - one victim of scammers, a 44-year-old nurse from Middlesbrough, lost over £10,000 when she was persuaded to buy an 'investment property' that turned out to be worth a fraction of the price she paid.

Gerry Sutcliffe, consumer minister, said in a statement that, while the government is trying to crackdown on the scammers, consumers should take steps to protect themselves: "We will continue to pursue the fraudsters and shut down their companies. But prevention is better than a cure. If people are aware of the warning signs, they won't be taken in in the first place," he said.

The DTI has published a series of guidelines on its website to help people avoid falling for swindles. It advises consumers to watch out for unsolicited investments opportunities, always get the opinion of an independent financial advisor before handing over any money and warns that if an investment looks to good to be true, it probably is.

For those who have already been a victim of a scam, the government advises reporting it to the DTI or Trading Standards if it involves goods, or the Financial Services Authority in the case of shares.