Large increase in suspected cases of investment fraud in 2022

Fraudsters use every method possible to create a reliable façade in order to hide their fraudulent activities. They then take the money that consumers believe is being invested in secure, profitable assets and divert it to their own pockets. During the year, FI has observed a number of trends and phenomena.

Large increase in number of warnings

Last year, we observed an increasing number of suspected fraud cases. In 2022, we issued warnings for 3,471 firms and websites, in other words firms that offer or say that they offer financial services to consumers without having the requisite authorisation. This is an increase of around 25 per cent compared to 2021. The sums that consumers lose can range from a few thousand SEK to up to millions.

"While it may seem logical to assume that the downturn in both the stock exchange and the value of cryptocurrencies would make fraud more difficult, the opposite appears to be true. Fraudsters are using the situation to their advantage and instead encouraging people to buy while prices are low. The promise of a high return and minimal risk is appealing in these uncertain times," says Mikael Sandahl, a supervisor at FI.

Fraudsters often demand payment in cryptocurrency

During the year, we have observed an increasing number of fraudsters demanding that deposits from consumers occur in cryptocurrency to a crypto wallet. Payments are made via a cryptocurrency exchange to a number of different crypto wallets that the fraudsters say their made-up firms use. The fraudsters are often helpful and have explanations for why they must be paid in this way. They naturally try to make it as difficult as possible to track where they are, and this is yet another way to make it difficult to trace what happens to them and the money.

"If the transaction requires the transfer of a payment in bitcoin or some other cryptocurrency, this is a red flag. Serious firms do not ask for payment in this manner. Also check that the firm is listed in FI's Company Register," says Sandahl.

It is common for fraudsters to assert that they come from serious firms or government authorities.

During the year, we received many reports of fraudsters contacting consumers and saying that they work for or are calling on behalf of both well-known firms and government authorities. For example, it was common during the year for fraudsters to say that they are calling from the real crypto companies Binance or Blockchain. On several occasions, they said they were calling from a government authority in Sweden or other countries, often in conjunction with offers to help recover money lost in a previous fraud.

During the year, fraudsters said that they were calling from FI when they contacted consumers. They use both email and phone calls to contact consumers. In a few cases they also attached a certification. There are also a number of fake websites that claim to be the official Swedish authority for the supervision of financial firms, for example ofi-se.org. We have issued warnings about this on several occasions. FI has also been in contact with the website host, among others, to have the websites removed, but they are still there.

Warnings in the fourth quarter

During the fourth quarter, we issued a warning about, for example, Royal Oak Investment, which several consumers had reported. According to the firm's website, it offers trading in CFD contracts (contracts for difference, a type of derivative), which are often linked to crypto currencies. As part of this fraud, the consumer is first asked to convert the money to a cryptocurrency and then send the cryptocurrency to a crypto wallet. Read warning here. 

We have also issued a warning about Aerofinancing. According to its website, the firm has offices in both New York and London. It also offers trading in CFD contracts (contracts for difference, a type of derivative), which are often linked to cryptocurrencies, but the whole thing is just a façade to hide fraudulent activities. Both of these firms created their websites in 2022. It is very common for fraudsters to use newly registered websites that have not existed long enough to be added to any warning lists. Read warning here.

Tips for how to avoid being tricked

Investment fraud occurs frequently and affects many consumers. The fraudsters are skilful and work both methodically and over the long term to trick people out of their money. Most often, they use a well-polished sales pitch and refer frequently to well-constructed façades that are difficult to identify as false. Therefore, we publish information on a regular basis about both ongoing frauds and common methods, and we also publish tips to help consumers avoid being caught in an investment fraud. One example is our five top tips for how to identify a fraud attempt. (In Swedish)