Celebrity influencers are being used to promote crypto-currency and currency trading schemes which turn out to be scams, the City watchdog has warned.
These celebrities often have a large following on social media – an opportunity seized on by con-artists to cast a wide net for potential victims.
Bogus online trading platforms promise supersized returns but fraudsters may disappear with the invested funds.
Crime reporting centre Action Fraud said victims lost £27m in 2018-19.
The Financial Conduct Authority (FCA), the City watchdog, said that celebrity endorsements and images of luxury items such as expensive watches and cars on social media posts were often used to promote schemes.
These then linked to professional-looking websites where consumers were persuaded to invest.
However, it said that those tempted should remember not every investment opportunity is genuine. Criminals could use the names of well-known brands or individuals to make their scams appear legitimate.
Laura Suter, from regulated investment platform AJ Bell, said: “If your friend recommends something to you, don’t assume that they have done all the research for you. You can check on the regulator’s register to see if the company is legitimate.”
Reports of either foreign currency or crypto-currency fraud more than tripled last year to 1,834 cases. The typical amount lost by each victim was £14,600.
Action Fraud director Pauline Smith said: “These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms. It is vital that people carry out the necessary checks to ensure that an investment they are considering is legitimate.”